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Wednesday, April 18, 2012

House Republicans to Tackle Federal Budget

The budget, which passed the House last month and has since become a central focus of the presidential campaign, has faced blistering criticism for steep cuts to federal programs, including a blast from President Obama, who called it “thinly veiled social Darwinism.”

But the deep reductions that Mr. Obama spelled out for higher education, medical research, crime fighting and Head Start are more supposition than reality until the details are filled out. And the charge that such cuts would merely pay for still more tax cuts for the rich is expressly denied by Republican leaders who foresee no change in revenue under the budget.

Now the real work begins. Representative Dave Camp of Michigan, the House Ways and Means chairman, will hold meetings with Republican the rank and file next week to map out an overhaul of the tax code that strips it down to just two personal income tax rates — 25 percent and 10 percent — and a 25 percent corporate income tax rate, and to pay for it by curtailing or ending tax deductions and credits.

A half-dozen committees will begin drafting legislation to meet a budget-mandated $261 billion in savings over the next decade to stave off scheduled across-the-board cuts to the military in January. First up will be the Judiciary Committee on Tuesday, with a bill to curb medical malpractice suits and save the government $39.7 billion over 10 years. On Wednesday, the Financial Services Committee will vote on legislation to save $35 billion over a decade by eliminating a fund designed to prevent future bank bailouts, ending a foreclosure reduction effort, slicing $4.9 billion from the federal flood insurance program, and putting the new Consumer Financial Protection Bureau under Congressional control and cutting its budget by $5.4 billion.

Also on Wednesday, the House Ways and Means Committee will draft a measure to save $53 billion over 10 years, in part by grabbing back overpayments for subsidized insurance purchases under the new health care law and by requiring parents to present a Social Security number to claim child care tax credits.

The Agriculture Committee must slice $33.2 billion from its programs, most likely focusing on nutrition and food stamps. The House Energy and Commerce Committee must find nearly $100 billion in savings when it meets in two weeks. Much of it will come from repealing parts of the president’s health care law and curbing medical liability lawsuits.

Michael Steel, a spokesman for Speaker John A. Boehner of Ohio, said: “President Obama’s own secretary of defense has said the defense sequester would ‘hollow out’ our armed forces. We have a responsibility to show a better, smarter option.”

Even with these efforts, critics say the budget is far less groundbreaking than its supporters and opponents say it is. For all his big numbers on spending reductions and tax changes, Representative Paul D. Ryan of Wisconsin, chairman of the House Budget Committee, included few details or instructions to make them happen.

The attainability of his deficit reduction targets are “impossible to know unless you start to describe what kind of cuts are really required,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, who supports the ambition of the budget but faults its partisan tilt.

For instance, to meet its deficit reduction targets, the House budget calls for nearly $1.9 trillion in savings from entitlement programs outside Social Security, Medicare and Medicaid, so called other mandatory spending, but it instructs committee chairmen to draft legislation securing a tiny fraction of that amount.

The budget describes significant changes to Medicare, Medicaid and food stamps. Medicare would be transformed from a government-run insurance program to a menu of private insurance plans subsidized by the government. Medicaid and food stamps would be converted to block grants to the states, which would be allowed to impose work requirements and time limits. But nowhere are the relevant committees mandated to actually draft the legislation to make any of that happen. Mr. Camp has already indicated he has no intention of drafting Medicare legislation that has no chance of becoming law. And Senator Harry Reid, the majority leader, has already said he has no intention of passing a budget this year.

The House Appropriations Committee would have to find cuts from domestic discretionary programs through 2022 totaling $1.44 trillion below program growth through inflation, 25 percent, or $1.2 trillion — 21 percent — below caps agreed to last summer, according to the Center on Budget and Policy Priorities, a liberal research organization. But that cutting would not kick in until 2014, when appropriators would have to cut domestic spending by 24 percent. For fiscal 2013, the budget that must be finished before the election, the cut is a more manageable 9.8 percent below inflation growth and 7.5 percent below agreed-upon levels.

The two biggest question marks are on a tax overhaul and the black box of “other mandatory” cuts. On taxes, collapsing the current six tax brackets into two, with the highest bracket dropping to 25 percent from 35 percent, would cost the Treasury revenue totaling $4.5 trillion over 10 years, according to the nonpartisan Tax Policy Center. Democrats and some tax experts say that paying for that with loophole closings cannot be done, unless Republicans plan to gut tax programs for the working poor, like the earned income credit.

But Sage Eastman, a spokesman for the Ways and Means Committee, said Mr. Camp was eager to prove them wrong. Donald Marron, a former Bush administration economist and president of the Tax Policy Center, tallied $7.7 trillion in “tax expenditures” over the next five years.

“I’ll say emphatically we can do it,” Mr. Eastman said.


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