What’s in the “Ryan” Budget Resolution?

We’ve all heard a ton about the “Ryan budget”, especially the plan to privatize Medicare for everyone under age 55. We also know that most of the House Republicans voted to pass this plan. But there hasn’t been much discussion of what exactly they voted on, what it would do if enacted. Probably because explaining the purpose of the budget resolution requires a journey into super-wonky land, and nobody is particularly eager to take the time to translate it into plain English.

Sounds like a job for Main Street Insider, right? Well, we certainly thought so. Ultimately, it became clear that a 90-second video on a topic this nuanced and policy-heavy just wouldn’t add much value beyond the one-page paper summary that forms the starting point for all of our episodes. But instead of scrapping the idea altogether, we decided to release the text summary as a stand-alone document.

See below the fold for the one-pager…

H. Con. Res. 34: What’s in the “Ryan” Budget Resolution?
Introduced 4/11/2011
Sponsor: Rep. Paul Ryan (R-WI1)
Click here to download this summary (pdf)

Status: Passed House on April 15th by a 235-193 margin, mostly along partisan lines. A motion to proceed to debate in the Senate on May 25th failed by a 40-57 margin, with five Republicans voting no. The FY2012 budget situation remains in gridlock as of June 27th.

Purpose: With his “Path to Prosperity” plan, new House Republican Budget Chair Paul Ryan set forth an aggressive effort to dramatically alter America’s spending priorities and advance the Republican vision of government. This “austerity” budget plan has already emerged as perhaps the foremost topic in the 2012 election cycle.

However, the budget resolution widely considered synonymous with the Ryan plan does not spend money or enact policy in itself. It simply establishes binding spending limits for the coming year and lays out guidelines and instructions to ensure future spending and revenue targets are met. It has no force of law beyond the internal rules of Congress itself.

Summary: Due to the unique nature of the budget resolution, not all aspects of the Ryan plan are included directly in H. Con. Res. 34. They break down as follows:

1) The budget resolution explicitly:

  • Returns non-defense discretionary spending to below pre-2008 level and freezes it there for five years;
  • Adopts the modest savings on defense spending proposed by Former Secretary Gates; overall levels would continue to rise;
  • Prohibits the House from considering any legislation that would case discretionary spending limits to be exceeded;
  • Prohibits the House from considering any legislation that would substantially increase mandatory (entitlement) spending over any of the next four decades;
  • Calls for tax rates to remain stable at around 18-19% of GDP;
  • Recommends spending levels declining from the current level of around 24% of GDP to about 20% by 2015 and just 14.75% by 2050, virtually eliminating the national debt by that time.

Note: These provisions would not require further congressional action to become operative.

2) The budget resolution explicity assumes the following by exempting from the spending limits or otherwise calling for:

  • Conversion of Medicare from an entitlement program administered by the government to a voucher for approved private coverage, a system similar to the new health care exchanges open to the general public. Effective for those under 55 years old;
  • Repeal of the Patient Protection and Affordable Care Act (health care reform);
  • Indefinite extension of the 2001 and 2003 “Bush” tax cuts, and the upper-income provisions of the 2010 tax deal. These provisions are all currently slated to expire at the end of 2012;
  • Passage of war funding in supplemental appropriations bills;
  • Temporary or permanent reform of the Alternative Minimum Tax;
  • The budgetary effects of tax reform that lowers tax rates;
  • Federal pension reform that reduces the debt;
  • Development of a bipartisan process to enact reforms to Social Security (does not present specific proposals).

Note: Further congressional action is required to enact any of these measures.

3) The budget resolution implicitly allows for the following in its spending and revenue targets:

  • Decrease in the top individual income tax rate from 35% to 25% and consolidation of the current six tax brackets into just two;
  • Decrease in the corporate tax rate from 35% to 25%;
  • Efforts to offset the lower rates by closing as many tax deductions as politically feasible (the plan does not offer specifics);
  • Conversion of Medicaid and food stamps from federal entitlements with coverage requirements to simple block grants indexed to inflation and population growth. This will provide flexibility to the states but will also represent a large funding cut over time for both programs and will deeply impact coverage for low-income Americans;
  • Reversal of the recent increases in Pell Grant funding;
  • Repeal of the Dodd-Frank financial reforms and gradual privatization of housing finance GSEs Fannie Mae and Freddie Mac.

Note: Further congressional action is required to enact any of these measures.

CBO Score: None provided, but CBO did summarize the policy document upon its release: http://www.cbo.gov/doc.cfm?index=12128

Further links

Full bill text: http://www.govtrack.us/congress/billtext.xpd?bill=hc112-34
Official CRS Summary: http://www.govtrack.us/congress/bill.xpd?bill=hc112-34&tab=summary
Rep. Ryan summary of full plan: http://budget.house.gov/UploadedFiles/PathToProsperityFY2012.pdf
WaPo summary of full plan: http://www.washingtonpost.com/blogs/ezra-klein/post/paul-ryans-budget-in-summary/2011/03/28/AFnwrZkC_blog.html
Roll call tally of final House vote: http://www.govtrack.us/congress/vote.xpd?vote=h2011-277
CBPP explanation of the federal budget process: http://www.cbpp.org/cms/index.cfm?fa=view&id=155

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  • mrbuddy

    Ryan doesn’t finance WWIII—which if we have a Republican President we will be guaranteed!!This is just dangerously frightening::Nothing for the  workers in America–surfdoom rises!!  Senator Sanders has the right approach–just copy his speech Mr. President–homework done!! Appoint Elizabeth Warren–repubs really afraid of this woman–why??Women in Congress need to be standing up for her!!Mr. Boehner needs to step up to his job or get out!!Be a leader sir for the good of the country!!Republicans want to push our economy into the ocean–Why?? 

  • Lurker

    The word “kafkaesque” springs to mind.   How can something so woolly be a resolution?  Its more like a nasty intimation seen through a glass darkly.

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