Ryan's Budget Plan Could Cause Problems Within Both Parties

Paul Ryan's budget proposal takes a knife to spending, but it would still take decades to balance it.

House Budget Committee Chairman Rep. Paul Ryan,
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Wisconsin Rep. Paul Ryan's budget plan is bold, but it may not be bold enough for some conservative groups and members.

The budget plan, announced Tuesday, would change Medicare into a voucher-based system, drastically overhaul the tax code, repeal Obama's healthcare reform and scale back many social welfare programs by converting them into block grants.

Despite the large swath of items the plan touches upon, it would still take nearly 30 years to balance the budget and start paying down the national debt. While it would cut the deficit more than President Obama's budget proposal released earlier this year, it still may provoke some backlash among those hoping for something bolder.

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The conservative group Club for Growth, an influential anti-tax organization with a history of giving incumbent Republicans heartburn with competitive primary challenges, previously warned against a budget which didn't balance the debt within a 10-year window.

"Balancing the budget within 10 years or less is vital to restoring confidence in America's financial future and to avoid the fate of other nations that are crippled by enormous debt," the organization said in a statement issued last week. "The Club for Growth is Strongly concerned that any budget that does not balance with this reasonable timeframe is simply an exercise in futility."

The Club for Growth has yet to issue a statement yet on the newly unveiled budget.

When asked about the date, Ryan blamed the data crunchers at the Congressional Budget Office for failing to take into account the economic gains from his tax policies. That's the so-called "dynamic scoring" which conservatives have often clamored for, although Democratic critics claim that it's a budget fantasy to make tax cuts look less costly than they really are. Ryan's plan doesn't cut overall taxes, but it includes revenue-neutral tax reform, which would drastically simplify both individual income tax rates and the corporate tax code, reducing rates while also eliminating many tax deductions and credits.

With Democrats sure to oppose the budget in lockstep, Republicans can't afford to lose many of their own. Already, the Republican leadership was forced to sharpen the discretionary budget cuts after more conservative members found them lacking.

The budget resolution doesn't go the president's desk or become law, but it is a crucial step of the often complex formal Congressional budgeting process. For the past several years, it's been overlooked in favor of budget standoffs and last-second deals, and it's also become a valuable political campaign document for both sides of the aisle.

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The plan is also enraging Democrats, who say the GOP is failing to follow through on a deal struck last summer on overall discretionary spending levels. The fight over the debt ceiling orginally called for a $1.047 trillion discretionary spending limit. Ryan's plan sets a lower figure at $917 billion.

"A majority of the Republican conference in the House voted for the [Budget Control Act] as did one half of the Democratic caucus," said Norm Dicks, the ranking Democrat on the House Appropriations Committee. "Republicans now find it difficult to pass a budget resolution at the BCA level. But an agreement set in law does not become null and void just because it is politically inconvenient."

Unlike the bulk of the budget plan, this isn't just for show. If passed by the House, Ryan's budget spending levels would be used in negotiations with the Senate under the normal appropriations process—which both sides have agreed to. With Democrats not in the mood to budge, the difference sets up a possible, though still unlikely, election-season showdown on Sept. 30, when current funding is set to expire.

Ryan claimed that his budget simply took into account the so-called defense sequester—automatic spending cuts which were triggered in November by the failure of the so-called "Super Committee." His budget would call for those cuts to be spread from defense spending to other areas such as agriculture, with individual committees assigned to find the savings in their own budgets.