Paul Ryan, Tom McClintock, Bill Flores
J. Scott Applewhite  /  AP
House Budget Committee Chairman Paul Ryan, R-Wis., works with Republican members of the committee on Capitol Hill in Washington on Tuesday. He is flanked by Rep. Tom McClintock, R-Calif., right, with Rep. Bill Flores, R-Texas, at left.
updated 4/7/2011 9:01:26 AM ET 2011-04-07T13:01:26

The Republican-led House Budget Committee approved a $3.5 trillion budget for 2012 on Wednesday that was hailed by its GOP authors as an end to a federal spending binge but savaged by Democrats as an assault on retirees and the poor.

The party-line 22-16 vote underscored the sharp partisan divide over the blueprint, crafted by the committee's chairman, Rep. Paul Ryan, R-Wis., at a time of record federal red ink.

The measure lays the groundwork for a decade of cuts in spending, taxes and deficits, tempered by a shift in medical costs from the government to future retirees and a reshaping of the two chief federal health programs for the elderly and poor, Medicare and Medicaid.

The budget's approval, which followed a daylong debate by the committee, sends the plan to the full House, where GOP leaders hope for a vote in the coming days.

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Story: In GOP's new plan, big health cost shift to elderly

Though the blueprint covers the entire reach of government, committee members focused much of their attention on health and other social programs, from which Republicans were proposing to wring hundreds of billions of dollars in savings over the next 10 years. Ryan said that with sky-high deficits, the government needs to limit its mission to programs that are truly needed.

"We don't want to turn the safety net into a hammock that lulls people to lives of complacencies and dependencies, into a permanent condition where they never get on their feet," he said.

Dem: Plan 'rips apart' safety net for poor, elderly
Rep. Chris Van Hollen of Maryland, the panel's top Democrat, said Republicans were protecting tax breaks for corporations and the wealthy at the expense of the middle class and the poor. The Republican budget proposes whittling the current 35 percent top tax rate on individuals and businesses to 25 percent.

"It doesn't reform Medicare, it deforms and dismantles it," Van Hollen said of the GOP's budget. As for Medicaid, the budget "rips apart the safety net" for poor and older people, he added.

The budget is a nonbinding road map whose taxing and spending changes are supposed to be enacted in later, separate legislation. But Ryan's plan has no chance of being approved by the Democratic-run Senate, making it more of a statement of priorities that candidates are likely to embrace or attack during the 2012 campaigns.

Story: GOP's Ryan: Rising star or root canal Republican?

As committee debate extended into the evening, Republicans batted down a parade of Democratic amendments which, like the budget itself, were designed to score political points. By party-line votes, the panel rejected one amendment blocking tax cuts for millionaires and another rejecting reductions in Medicaid benefits for elderly nursing home residents.

Video: Budget battle crosses into Medicare (on this page)

"It's unconscionable that Republicans are abandoning our seniors, including our sickest and most frail seniors, for a political cause" of reducing the size of government, Rep. Allyson Schwartz, D-Pa., said.

Republicans castigated Democrats for trying to curb the blueprint's tax cuts, saying today's level of taxes and regulation make it harder for businesses to create jobs.

"Why don't you guys like small-business people?" asked Rep. Ken Calvert, R-Calif.

Tackling Medicare, Medicaid
Ryan's budget would shift more rising health care costs from taxpayers to individuals, medical service providers and states, giving them all an incentive to avoid waste and aim for quality and efficiency.

Medicare would remain largely unchanged for people now 55 and older. Starting in 2022, new retirees would get fixed amounts of money from the government to buy private insurance. The sick would get more money than others, the wealthy less.

Paul Ryan
J. Scott Applewhite  /  AP
House Budget Committee Chairman Paul Ryan, R-Wis. touts his 2012 federal budget during a news conference on Capitol Hill in Washington on Tuesday.

If that approach didn't work, as an analysis by the nonpartisan Congressional Budget Office suggests could happen, future Medicare beneficiaries, providers and states would feel the pain directly. That could send them right back to Washington clamoring for more subsidies.

Story: CBO: GOP budget raises health costs for retirees

The budget office analysis said future retirees would pay considerably more for health care under Ryan's approach. That's because the Medicare benefits package would be more expensive to deliver through private insurance companies, which pay doctors and hospitals more than the government and have higher overhead costs.

By 2030, the government payment would cover only about one-third of the typical retiree's total health care costs, the budget office said.

Ryan also would gradually raise the current Medicare eligibility age of 65 to 67 by 2033. And he would revive the "doughnut hole" gap in Medicare prescription drug coverage that last year's health care law eliminated, the budget office said.

Medicaid, the federal-state program that covers low-income and severely disabled people, would be converted into a block grant program giving each state a lump sum to design its own insurance plans. The poor would no longer, under federal law, have a right to health care.

The budget would repeal President Barack Obama's health care overhaul, which became law last year.

Although Ryan's plan reduces spending by some $5 trillion over the next decade, that still wouldn't bring the federal budget into balance. Next year's near $1 trillion shortfall would still be nearly $400 billion in 2021.

He also would limit next year's spending for most domestic programs to $360 billion — nearly 25 percent less than Obama has proposed for everything from agriculture research to building facilities for veterans. That underlines the drastic differences between the two parties' visions of government.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: Budget battle crosses into Medicare

  1. Closed captioning of: Budget battle crosses into Medicare

    >> reporter: i'm kelly o'donnell on capitol hill , where the house republicans' budget man called for dramatic cuts and changes.

    >> we put the nation on the path to actually pay off our national debt .

    >> reporter: 41-year-old wisconsin congressman paul ryan is going big. compared to the white house budget laid out in february, the republican plan over the next decade would cut government spending by $6 trillion, reduce the federal deficit by $4.4 trillion compared to the president's budget, according to the congressional budget office . both parties and the president's own bipartisan debt commission say the federal debt is a national emergency .

    >> this is the most predictable economic crisis in our history. and what are we doing, playing politics?

    >> reporter: the biggest flash-point is altering medicare , where health care costs have soared.

    >> we propose that we support people more if they're low income, more as they get sick, and wealthy seniors don't get as much support.

    >> reporter: for anyone 55 and older, no change. but when younger workers reach retirement, they would choose private health insurance like federal workers and get a government subsidy to help pay for it. and medicaid for the poor would be controlled by states. democrats call the republican plan too severe, saying it would hurt the most vulnerable.

    >> no longer would medicare be a guarantee of health insurance coverage. instead, medicare would become little more than a discount card. this plan would literally be a death trap for some seniors.

    >> reporter: on taxes republicans propose lowering the top tax rates for individuals and corporations to 25%. so this boils down to republicans got a big spotlight today to argue their case. but many of the specific ideas face real resistance politically. still, republicans say this was a starting point. brian?

    >> kelly o'donnell on the hill. and chuck todd at the white house before that starting us off tonight. thanks to you both. one more note on politics. florida democratic congresswoman debra wasserman schultz , who we saw right toward the end of kelly 's reporting there, was named the new head of the democratic national committee today. and she will keep her day job in congress at the same time.


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