Behind Paul Ryan's Budget

WASHINGTON - JUNE 01:  Republican House member...

Republican House members, including Budget Committee Chairman Rep. Paul Ryan (R-WI) (2nd L), leave after a meeting with President Barack Obama June 1, 2011 at the White House in Washington, DC.  (Image credit: Getty Images via @daylife)

House Budget Committee Chairman Paul Ryan released the House Republican alternative to President Obama’s budget this morning. Few people expect the Ryan budget to become law, including Ryan. Instead, the Ryan and Obama budgets will help frame the debate over economic policy heading into the November elections. As Ryan put it in a Wall Street Journal oped, “no two documents illustrate the choice of two futures better than the president’s budget and the one put forward by House Republicans.”

Key highlights of the Ryan budget include:

  • Spending: Cuts government spending by an additional $6.2 trillion over the next decade compared to President Obama’s budget; brings federal spending below 20 percent of GDP; returns non-security discretionary spending to below 2008 levels.  
  • Taxes: Reduces number of tax brackets from six to two rates of 10 percent and 25 percent; abolish the Alternative Minimum Tax; reduce corporate tax rate from 35 percent to 25 percent; shifts to a “territorial” tax system that taxes corporate profits in the country where they are earned with no “repatriation” tax.
  • Debt and Deficits: Reduces deficits by $4.4 trillion over next decade compared to Obama budget; brings deficit under $1 trillion in FY2012.
  • Health Care:  Repeals President Obama’s health care law; introduces a “competitive bidding” process to Medicare, forcing private health plans to compete to offer coverage at the lowest cost; maintains current Medicare system for those “in or near retirement.”