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Wednesday, April 4, 2012 - 15:10

US Budget Experts See Ryan's FY'13 Budget As Bold And Flawed

--President Obama Scorches Plan As 'Antithetical' To US Traditions
--House Speaker, Rep. Ryan Tout GOP Plan As Strong Response To Crisis
--Budget Experts Say Ryan Budget Is Very Bold--But Too Partisan To Pass

WASHINGTON (MNI) - If you listen to House Speaker John Boehner and House Budget Committee Chairman Paul Ryan, the budget Ryan wrote and the House approved last week is an aggressive fiscal plan that finally makes desperately needed reforms to costly entitlement programs and begins to limit out-of-control federal spending.

But if you listen to President Barack Obama, Ryan's budget is a reckless and unbalanced fiscal framework that slashes the already frayed social safety net while offering deep tax cuts for the wealthy.

The GOP leaders and Obama exchanged sharply different views over the Ryan budget Tuesday.

Speaking first, Obama said the Ryan budget is "antiethical to our entire history as a land of opportunity and upward mobility for everyone who's willing to work hard for it."

Twisting the knife even harder, Obama called the Ryan budget "a prescription for decline."

But Ryan tossed some rhetorical bombs back at the president, accusing him of "tired and cynical political attacks."

"History will not be kind to a president who, when it came time to confront our generation's defining challenge, chose to duck and run," Ryan said Tuesday.

Perhaps not surprisingly, most budget experts tend to see the Ryan budget neither as the exemplar of fiscal virtue as the GOP proclaims nor as "thinly veiled Social Darwinism" as Obama declared Tuesday.

Rather, many independent analysts see it as a surprisingly bold but also deeply flawed plan that makes important entitlement reforms but tries to cut deficits through tough medicine on the spending side of the ledger and vague talk of tax reform.

The House approved Ryan's budget resolution last week on an 228 to 191 vote. All Democrats opposed the GOP budget; all Republicans, except for 10, voted for Ryan's plan.

Budget resolutions set broad spending and revenue goals and make deficit projections. They are congressional blueprints and are not binding law. To actually change spending and tax laws, separate legislation will be needed.

Ryan has said his budget would cut spending by $5 trillion more than would Obama's budget over a decade and would reduce deficits by $3.3 trillion more than would the president's budget.

Ryan's budget makes deep cuts in the projected growth of federal spending and endorses the fundamental overhaul of Medicare, Medicaid and welfare programs. It also calls for repealing the 2010 health care law.

Ryan's budget backs the extension of Bush-era tax cuts and undertaking fundamental tax reform in which the current six individual rates are collapsed into two rates, 10% and 25%. The corporate rate would be cut to 25%. He argues that so-called tax expenditures should be sharply curtailed but does not say which ones should be eliminated or reduced.

Ryan's budget sets FY'13 discretionary spending at $1.028 trillion, $19 billion below the $1.047 trillion that was allowed for in last summer's debt ceiling agreement.

Ryan also calls for enacting a package of spending cuts to prevent the $110 billion in across-the-board spending cuts that are scheduled to begin next January.

It secures some of its savings by cutting the federal workforce by 10% over three years, freezing federal pay through 2015, slowing the growth of federal financial aid for college students and focusing it on low-income students.

For the FY'13 through FY'22 period, Ryan's budget would result in $3.127 trillion in cumulative deficits. His budget would not balance the federal budget until 2040.

A policy paper by Alison Fraser and Patrick Knudsen of the Heritage Foundation, a conservative think tank, praises the Ryan plan, saying it "features strong, substantive, market-based reforms to the health entitlements and a solid, growth-oriented tax plan."

"This budget is not perfect," Fraser and Knudsen write of the Ryan fiscal plan. "It should be bolder in implementing its entitlement reforms. It should strive for more aggressive spending reductions. It is slow to reach balance, largely the consequence of avoiding Social Security reforms and slowly phasing in health entitlement reforms," they add.

An analysis of the Ryan budget by the liberal Center on Budget and Policy Priorities scorches the plan. Robert Greenstein, the president of the budget group, calls the Ryan budget a radical and dangerous blueprint.

"The new Ryan budget is a remarkable document -- one that, for most of the past half-century, would have been outside the bounds of mainstream discussion due to its extreme nature. In essence, this budget is Robin Hood in reverse -- on steroids," he writes.

"It would likely produce the largest redistribution of income from the bottom to the top in modern U.S. history and likely increase poverty and inequality more than any other budget in recent times (and possibly in the nation's history,)" he added.

Bob Bixby, the executive director of the Concord Coalition, sees the Ryan budget as a bold but flawed plan. "Chairman Ryan's proposal fits the magnitude of the challenge, particularly in suggesting major structural changes in Medicare and Medicaid, which comprise the biggest share of projected federal program costs," Bixby writes.

But Bixby says the plan's assumptions regarding savings from discretionary programs don't appear to be realistic and its references to cutting back tax expenditures are not specific. Moreover, he said Ryan would use these savings from cutting tax expenditures just to cut tax rates and not use any of the savings for deficit reduction.

Maya MacGuineas, president of the Committee For a Responsible Federal Budget, said Ryan's plan "puts our nation on a fiscally sustainable path."

But she also notes that his call for scaling back tax expenditures are not specific and are difficult to evaluate.

She adds that Ryan's budget will be judged as too partisan to attract broad support in Congress and the country.

"It is tough to imagine this proposal gaining broad-based bipartisan support, which is what we need to move toward adopting a plan," MacGuineas.

** MNI Washington Bureau: (202) 371-2121 **

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