Stark choice in dueling budget plans

WASHINGTON — The two budget proposals now in Congress present Americans with a choice even starker than the one between the presidential candidates last year.

Under the 10-year budget plan released by House Republicans this week, tax rates would fall for high-income Americans and corporations, defense spending would be bolstered, and more than 30 million uninsured people would lose access to government-backed healthcare. Food stamps, student loans and free school lunches for children would be cut.

The Senate Democrats’ plan, released Wednesday, would increase taxes on the wealthy and some corporations, cut the Pentagon budget and add $100 billion in highway and school construction spending. Their plan would make modest reductions in healthcare and other domestic programs.

The Republican plan would not only balance the budget by 2023, but produce a surplus. The Democrats would reduce deficits to a level they see as sustainable, although red ink would continue to flow at about $500 billion annually by 2023.

The enormous distance between the plans illustrates why no amount of intimate dinners or casual chit chat between President Obama and his Republican opponents is likely to lead to an agreement.

“Ultimately, it may be that the differences are just too wide,” the president said in an ABC News interview that aired Wednesday.

Obama made another courtesy call on the Capitol on Wednesday, this time to House Republicans, in his search for moderate-minded allies interested in a broad budget deal.

House Speaker John A. Boehner (R-Ohio) welcomed the “frank and candid exchange,” but the mood did not seem as upbeat as the assessment from the dozen GOP senators who dined with Obama last week.

The sharply divergent budget plans are likely to serve not only as starting points for negotiations, but as central elements in the 2014 midterm election. Republicans are attacking Democratic senators for drafting a budget that does not balance. Democrats are going after the Republican budget, written by Rep. Paul D. Ryan of Wisconsin, for cutting too deeply into Medicare and programs for the poor while giving tax breaks to the wealthy.

“The budget debate is often discussed in terms of abstract numbers, and political winners and losers,” said Sen. Patty Murray (D-Wash.), chairman of the Senate Budget Committee, when she released the party’s proposal Wednesday, its first budget plan in four years. “But the truth is that budgets are about far more than that. They are about our values and our priorities.”

Republicans’ goal to balance the budget in 10 years is a nod to the influence of the tea party and Ryan, the former vice presidential nominee, who sees the nation’s nearly $17-trillion debt as its biggest preventable crisis.

They adhere to the supply-side argument that cutting taxes will grow the economy. Republicans reject new taxes. Their budget initially includes revenue from the New Year’s tax increase, but those top rates would eventually drop from 39.6% to 25% under Ryan’s plan.

The parties do agree that healthcare spending underlines the government’s fiscal imbalances, as the government’s medical costs continue to increase as the population ages.

Democrats attempt to bring down those costs by expanding Medicare savings enacted with the president’s healthcare law, noting that per capita healthcare spending has slowed.

They also propose trims to Medicaid, the health program for the poor, disabled and seniors in nursing homes.

Republicans, on the other hand, gut the new health law, cutting $1.8 trillion over the decade by ending government subsidies to help the uninsured buy private policies or enroll in Medicaid. Those subsidies are scheduled to start in 2014.

Ryan’s signature proposal would replace the Medicare program for future seniors, those born after 1959, with a government voucher they could apply to the costs of private insurance or Medicare. The value would be capped and is not guaranteed to cover the full cost of Medicare.

“We cannot keep spending money that we do not have,” said Rep. Todd Rokita (R-Ind.), during a House Budget Committee hearing Wednesday.

Senate Democrats, meanwhile, have taken the view that balanced budgets are overrated, hewing to Obama’s preference to instead keep deficits in check by not allowing them to grow faster than the economy.

Under their plan, deficits would shrink over a decade by what they call a balanced approach through $975 billion in tax increases on the wealthy and corporations and $975 billion in reductions across defense, Medicare and domestic spending.

Both parties target loopholes and deductions in the tax code, but Democrats would apply the new revenue to reduce deficits and cover spending, while Republicans would use it to lower tax rates.

lisa.mascaro@latimes.com