Republicans in the House of Representatives proposed their vision of the 2016 federal budget Tuesday, a starkly different approach from that of President Barack Obama that would balance the books within a decade by cutting $5.5 trillion in projected government spending.
The Republican proposal would leave Social Security untouched and reduce projected spending on Medicare by 2 percent over 10 years while making steep cuts in projected spending for Medicaid and other health programs and eliminating all spending for the Affordable Care Act.
“It is a plan that balances the budget in less than 10 years, secures and strengthens vital programs, like Medicare,” said House Budget Committee Chairman Tom Price, R-Ga., who called the proposed blueprint A Balanced Budget for a Stronger America.
It was a contrast to the budget Obama proposed Feb. 2, which seeks to boost middle-income families through new programs paid for by more taxes on wealthy Americans. Obama would also use a one-time tax holiday to bring home foreign earnings in order to pay for major infrastructure spending. His plan would not balance the budget, instead leading back to $1 trillion-plus annual deficits.
“The philosophical difference is huge between the president’s budget and the House budget, and the twain shall never meet, I’m afraid,” said Rudolph Penner, a policy expert at the centrist Urban Institute, a research center.
“We’re going to have a robust debate,” Obama said Tuesday.
The president said he hoped “that ultimately we’ll find some compromises where together we are financing the education, the research, the training, the building of roads and bridges and ports, railways, all the things that we need to grow and put people back to work.”
Republicans control the House and Senate, and the budget process will be a test of their ability to work together as much as a test of working with Democrats. In the House, fiscal conservatives have clashed with members who are willing to ease spending restraints if it means spending more on the military.
The Price plan also envisions bypassing some restraints on military spending that have been in place since 2011.
Short on specifics, Price would lower the top tax rates for individuals, families, small businesses and corporations and would move away from the worldwide taxation approach, where a U.S. corporation’s earnings are subject to U.S. taxes no matter where those earnings occurred.
He’d also abolish the alternative minimum tax, a creeping tax not indexed to inflation that threatens every year to ensnare more middle-class taxpayers absent congressional intervention.
“Our nation would be stronger and our economy would thrive,” said Rep. Paul Ryan, R-Wis., a former Budget Committee chairman who now heads the tax-writing Ways and Means Committee. “Chairman Price’s proposal is a serious, substantive document, and it has my full support.”
Price’s budget hints that any revenues that are lost from lowering the top tax rates would be offset by closing unspecified loopholes. Hypothetically, these could include anything from ending the deduction for mortgage interest or state taxes to treating company-provided health care as taxable income.
“Our budgets are nothing less than a statement of our values. Republicans’ values are clear: big tax breaks for the ultra-wealthy and no concern for the challenges faced by hardworking Americans,” charged Rep. Nancy Pelosi, D-Calif., the House minority leader.
The plot will thicken Wednesday, when Senate Budget Committee Chairman Mike Enzi, R-Wyo., offers his own budget resolution, which is expected to share many themes with the Price plan.
Speaking only on the condition of anonymity in order to discuss a plan that hasn’t yet been released, a GOP aide said the Senate proposal would resemble the House plan in three ways. Both generally would balance the budget at the end of a decade, the aide said, and both would build in flexibility to increase military spending. They also envision the use of an arcane budget tool called reconciliation to make it easier to repeal the Affordable Care Act over Democratic objections.
Under the House plan, spending would still go up, but much more slowly than it would otherwise. Spending would top $3.79 trillion in the fiscal year that begins Oct. 1 and would climb to $5.08 trillion by 2025.
But debt held by the public would fall as a percentage of the broader economy from 74 percent in fiscal year 2016 to 55 percent in 2025. Under Obama’s budget or under current law, the debt would remain in the ballpark of 74 percent to 81 percent of the economy.
The House budget plan, which counts on a number of unlikely things all happening together, would increase deficits in the first two years but would hit a surplus in 2024 and 2025. Under Obama’s equally unlikely plan, annual budget deficits would reach $1.1 trillion by 2025.
Anita Kumar contributed to this article.