Paul Ryan, the Republican Budget, and the Federal Deficit

Last Tuesday, the Republican Chairman of the House Budget Committee, Representative Paul Ryan, released his budget proposal. As was anticipated, the House GOP plan will result in heavy cuts in funding from government services and programs as an attempt to draw down the national debt. It is unchallenged in the media, that the plan would achieve its intended goal of lowering the country’s long-term debt, but there are lingering questions as to the price Americans will have to pay to see their national debt go down.

The cuts in funding will result in Americans paying more for both health care and retirement services. Additionally, states would receive less federal funding, and many government programs would get the axe. As estimates are coming out from the non-partisan Congressional Budget Office (CBO), the current debt level of 62 percent would be reduced to 48 percent by 2040, and 10 percent by 2050. The CBO also has stated that if no modifications are made to current policies, the debt would reach 200 percent by 2040 and 300 percent by 2050.

Among the other major propositions outlined in the bill, it would have the current Medicare system replaced with a private health insurance that is subsidized by the government. As the New York Times notes, the plan may have traction, as it would reduce the enduring funding gap of the biggest source of the growing national debt.

However, as the New York Times additionally points out, the bill includes a provision that exempts individuals 55 and over from being subjected to the effects of the proposal. Speculation has arisen that this demarcation line is a play at splitting voting demographics in favor of the bills passage. However, it seems to make little practical or political sense for baby-boomers and the elderly to not remain protected by these governmental provisions. With the government rapidly approaching shutdown, it is unclear how this debate will proceed.

Sources:

http://money.cnn.com/2011/04/05/news/economy/house_gop_budget_cbo/?section=money_latest

http://www.nytimes.com/2011/04/06/business/06leonhardt.html?_r=1