GOP presidential candidates came out in immediate support for a new Republican budget plan (WashPost) unveiled Tuesday that would slash spending, lower and simplify taxes, overhaul Medicare, and cut food stamps. The latest budget proposal comes amid strong philosophical differences between Democrats and Republicans over U.S. fiscal policy, particularly how to reduce the country’s growing debt, which numerous analysts argue will force a crisis similar to the eurozone crisis if not soon addressed.
The Republican-backed budget draws stark
contrast with the fiscal 2013 budget proposal President Barack Obama released earlier this year. His $3.8 trillion plan would use taxes on the wealthy to offset priority spending on education, infrastructure , and clean energy. Obama also wants to reduce the corporate tax rate to 28 percent, down from 35 percent.
“We do believe that our [Republican] nominee, whoever this person is going to be, is going to be perfectly consistent with this,” said House Budget Committee Chairman Paul Ryan (R-Wisc.), who primarily drafted the “Road to Prosperity” budget proposal. Ryan explained his budget plan and how it will boost U.S. competitiveness in an opinion piece in The Wall Street Journal.
Mitt Romney called the plan “bold and exciting”(Politico) and in line with his campaign. Newt Gingrich, who was critical of Ryan’s spending plans last year, called the plan “courageous” and said that as president he would work closely with Ryan on spending plans (The Hill). In a radio interview, Rick Santorum said the plan
is “heading the right direction,” adding that it includes similarities to the two-rate tax plan he has proposed.
The exception was Ron Paul, who said the new Republican plan doesn’t go far enough
. “My plan actually cuts $1 trillion in spending in one year, and it sets the stage for serious reforms in entitlements while preserving benefits for seniors and the dependent,” Paul said in a press release.
Spending decisions have serious implications for national security and foreign policy. Defense Secretary Leon Panetta, who himself has chaired the House Budget Committee, has repeatedly warned that while long-running deficits are a national security risk, so are too-deep defense spending cuts (The Tennesseean). Secretary of State Hilary Clinton has defended Obama’s proposed 2 percent increase in the State Department budget as necessary to fulfilling U.S. responsibilities around the world (UPI).
For more on the candidates’ stances, check out CFR’s Issue Tracker on the Candidates and the Economy.
Suggested Other Reading:
A Washington Examiner editorial says the Ryan budget plan does something President Obama and “Democratic congressional leaders refuse to do — propose a 2013 federal budget that makes the hard choices needed if America is to regain its economic vitality and avoid becoming Greece.”
The New Republic’s Jonathan Cohn says the new Ryan budget is not much different from the last. “Restoring fiscal balance will require a mix of spending cuts and new revenue,” he writes. “This proposal, like Ryan’s last proposal, tries to achieve balance entirely with the former. It’s not going to work, nor should it.”
Congressional Budget Office Director Douglas W. Elmendorf discusses the effects of revenue increases and spending cuts on the projected budget deficit.
– Gayle S. Putrich, Contributing Editor