By Larry Jones
April 11, 2011

The House Budget Committee approved a budget blueprint, by a vote of 22 – 16 mostly along party lines on April 6, that promises to cut spending on domestic programs $102 billion below what the President proposed for Fiscal Year 2012, which begins October 1. Although the measure does not call for specific cuts in domestic discretionary programs, it sets spending limits on broad budget categories for the 12 appropriations subcommittees that must put together spending bills later this spring. If the House budget wins final approval, the appropriations subcommittees will be forced to make drastic reductions in a number of local priority programs such as community development block grants, job training assistance, COPS, Head Start, transit assistance and community service block grants.

Chairman of the House Budget Committee Paul Ryan (WI) called the proposal “our plan to tackle the nation's greatest problems.” In response, Democrats in both chambers have voiced strong opposition. Rep. Chris Van Hollen (MD), ranking Democrat on the House Budget Committee said, “We can't allow the House to balance the budget on the backs of our seniors, and we won't.” And Sen. Kent Conrad (ND) called Ryan's proposal “partisan and ideological.” He said of Ryan, “He provides dramatic tax cuts for the wealthiest, financed by draconian reductions in Medicare and Medicaid. His proposals are unreasonable and unsustainable.” The White House also weighed in, pointing out that while President Obama agrees with Ryan's goals of reducing the deficit, he disagrees with his approach.

Over the next ten years, the House Budget Committee proposal, called “The Pathway to Prosperity,” would reduce federal spending by $6 trillion compared to the President's budget. Most of the cuts would be achieved by changes in entitlement programs: the Medicaid program would be changed to a block grant program to states, cutting spending by $735 billion; Medicare would be changed, scaling back spending by $389 billion; and the new health care law would be eliminated, saving $1.4 trillion. The proposal further calls for reforming the tax code by capping revenues between 18 and 19 percent of GDP and by cutting the tax rate for the wealthiest taxpayers from 35 percent to 25 percent.

The measure, which calls for $3.5 billion to fund federal agencies and programs in 2012, would also put in place a number of policies to control federal spending. For example, spending on non'security discretionary programs (which includes domestic programs) would be reduced to 2008 levels and frozen for five years; a cap would be placed on total spending as a percentage of gross domestic product (the goal would be to bring spending down to 20.7 percent of GDP); any increase in the debt limit would have to be accompanied by spending reductions; the current ban on earmarks would be continued; eliminate federal subsidies for high speed rail; the federal workforce would be reduced by ten percent and federal pay would be frozen through 2015; funding levels Pell Grants would be returned to pre'stimulus levels; and job training programs would be consolidated.

While the House Budget Committee's proposal is likely to be considered and approved on the House floor the week of April 11, it is highly unlikely it will be considered by the Senate. Sen. Conrad is likely to put together an alternative budget proposal that calls for a combination of spending cuts balanced with some tax increases, and more modest changes in Medicaid, Medicare and other entitlements. And it will call for reducing the deficit by $4 trillion over the next decade.