Romney presents plan to cut $500 billion from federal budget

Before a noticeably cool but polite audience of conservative activists, Mitt Romney redoubled his efforts Friday to align his agenda with that of the tea party — laying out a plan to slash $500 billion from the federal budget, in part through major changes to the nation’s entitlement programs.

Romney’s proposals to reduce federal spending to 20% of the nation’s gross domestic product by 2016 were far-reaching but often lacked specifics.

The former Massachusetts governor said he would lower the cost of Social Security by raising the eligibility age for benefits, but he did not specify how quickly those changes would be phased in. He estimated that he could achieve tens of billions of dollars in savings by capping the cost of Medicaid, the federal program that provides medical care to the poor, and allowing the states to take it over — a move his campaign said would “empower them to innovate.”

In one of the most controversial elements of his plan, Romney proposed a major restructuring of Medicare, which currently provides health insurance to about 47 million elderly and disabled people. Under the changes, Medicare would become just one of many plans that seniors could purchase with a new “premium support” system that would give them a set amount of money each year to purchase a plan.

Aides said the plans would have to offer a level of coverage comparable to the benefits offered under the current Medicare system. They asserted that by encouraging a range of private insurers to compete with Medicare, which could begin running a deficit as early as 2024, the program’s costs could be lowered.

“The future of Medicare should be marked by competition, choice, and by innovation — rather than bureaucracy, stagnation and bankruptcy,” Romney said at the gathering of Americans for Prosperity at the convention center in Washington.

Romney underscored that there would be no changes to Social Security or Medicare for Americans who are at or near retirement.

Perhaps to shield Romney from attacks as the campaign grows more heated, many of the most controversial aspects of the plan were hazy. It was unclear, for example, how a potential Romney administration would set the level of premium support for Medicare and how much that defined amount would increase as medical costs continue to skyrocket. Though Romney said wealthier seniors would be asked to pay more than low-income seniors, he did not explain how those differentiations would be made.

The Obama campaign and some of Romney’s Republican rivals criticized the plan from opposite ends of the spectrum. Obama campaign spokesman Ben LaBolt said Romney’s plan would place “a great burden on the middle class and the elderly.”

A spokesman for Texas Gov. Rick Perry, who has proposed limiting federal spending to 18% of the gross domestic product and giving Americans the option of a 20% flat tax, accused Romney of “tinkering around the edges.”

During his long march toward the Republican presidential primaries, Romney has found it far more difficult to ignite the passions of tea party activists than rivals like Perry — who captured their interest initially before slumping in the polls — and former business executive Herman Cain, who spoke at Friday’s gathering to wildly enthusiastic cheers.

The audience applauded many of Romney’s spending-cut proposals, which included limiting the salaries and benefits of government workers to those of private sector workers, and eliminating federal subsidies for Amtrak and for family-planning clinics that provide abortion services.

But Romney, who has been hampered in the polls by the health insurance mandate that he put in place in Massachusetts as governor, won his biggest cheers with his promise to repeal Obama’s healthcare plan, which he said would save $90 billion.

“I should have started with that line,” he said as the crowd gave him a standing ovation.

Friday night, meanwhile, GOP candidates who are struggling to make a mark in the presidential race gathered to press their cases before committed Republican activists at an Iowa state GOP fundraising dinner in Des Moines.

While a few made veiled swipes at their rivals, they reserved their harshest words for Obama, saying he had made the recession worse, had a dangerous foreign policy and that essentially he was in over his head.

“What we are faced with is the results of a radical ideology, and an inexperienced and incompetent president,” Newt Gingrich said. He received the warmest reception of the evening from nearly 1,000 attendees when he said that if he were the nominee, he would challenge Obama to seven three-hour debates, and if the president refused, he would follow him from town to town every day of the campaign.

Rick Santorum this week finished his tour of all 99 counties in Iowa.

“It is great, I would say, to be back in Iowa, but I’ve been here a little while,” said the former Pennsylvania senator, who put out a 20-point plan to strengthen families, protect traditional marriage and fight against abortion.

Perry tried to define himself as an outsider who would shake up Washington, and took the most obvious swipe at Romney.

“I happen to believe your choice in this race is between status quo tinkerers who represent the establishment, those who support bailouts and oppose major tax reform such as the flat tax,” and himself, who would bring a “wrecking ball” to the nation’s capitol, Perry said.

Minnesota Rep. Michele Bachmann said the nominee must not be willing to concede.

“We have to have a commitment that is absolutely grounded in cement that our nominee will be an individual who will stand strong and make sure there is no compromise” with repealing Obama’s health plan and banking regulations and abolishing the tax code, she said.

And Texas Rep. Ron Paul turned to his favorite subjects, the importance of the gold standard, and the need to audit the Federal Reserve and to downsize America’s foreign policy.

“If we sent people to Washington who live within the confines of the Constitution, we can solve our problems quickly,” he said.

maeve.reston@latimes.com

seema.mehta@latimes.com