Republicans drop Ryan budget plan in 'fiscal cliff' negotiations

WASHINGTON — The austere federal budget plan drafted by Rep. Paul D. Ryan and embraced by Republicans as a sweeping reimagining of government has hit a roadblock on the way to the so-called fiscal cliff.

The proposal had catapulted the 42-year-old Wisconsin Republican into a role as the party's intellectual leader on Capitol Hill and led GOP presidential nominee Mitt Romney to choose him as his running mate.

But on Monday, when House Republicans sent the White House their counteroffer on how to avert year-end tax increases and spending cuts, the Ryan budget was shunted aside. Republican leaders, acknowledging intense opposition from Democrats, concluded "it would be counterproductive."

Top Republicans, including Ryan, insisted this was not the end of the plan and pledged to "support and advance" its principles. But by sidestepping the plan, the House leadership sidelined the push for a transformative overhaul of federal entitlements — a move that quickly sparked dissent from the party's conservative wing.

Republican leaders said that unlike Democrats, they had taken a mature approach. The GOP fumed when the White House's opening bid was similar to the president's 2013 budget proposal.

"I think it's important that the House Republican leadership is trying to move the process forward," came the reserved response Tuesday from Sen. Mitch McConnell of Kentucky, the GOP leader.

Instead of offering the latest version of the Ryan plan, which passed the House in March, top House Republicans proposed $800 billion in new tax revenue over 10 years and $1.4 trillion in cuts to Social Security, Medicare and other spending. The cuts, although far steeper than those proposed by Democrats, depart from the major structural changes to social programs that Ryan advocated.

"There's no question that the Republican budget is preferred policy, but they're going to have to compromise somewhat," said Douglas Holtz-Eakin, a Republican policy advisor. "It's a significant concession designed to send the message that they're negotiating in good faith."

President Obama on Tuesday rejected the Republican offer, saying that the plan was "out of balance" and that the final deal must include higher tax rates for the wealthy.

House Speaker John A. Boehner also faced push-back from his party's right flank, which blasted the offer as an unnecessary concession at this early stage in the talks. Sen. Jim DeMint (R-S.C.), a hero of the tea party movement, said the plan would "destroy American jobs" and expand the deficit.

Dean Clancy, legislative counsel to the conservative group FreedomWorks, said he was "underwhelmed" by the proposal and would have been "more enthusiastic" if GOP leaders had offered a version of the Ryan plan. "You could read the current negotiation as a silent abandonment of the Ryan budget, which would be very disappointing," he said.

At the same time, many rank-and-file Republicans on Capitol Hill held their fire, careful to give Boehner room to negotiate a deal, which many may not ultimately back. They also know the potential consequences of bucking Boehner: Four members who had strayed from House leadership in key votes were booted this week from prime committee assignments.

"I don't think it gets us to balance at all. I don't know that it moves us in a dramatic enough direction," said conservative firebrand Rep. Steve King (R-Iowa), although he quickly added, "I'd like to know a little more about the speaker's strategy and want him to have the strongest hand possible."

With their counteroffer, Republicans ignored a budget plan that had, in a short time, ascended to enormous influence within their party — "the lodestar, the guiding light," Holtz-Eakin said.

Ryan's popularity has ebbed and flowed before, even as he remains a highly influential figure among Republicans on Capitol Hill — so much so that he was among the few Boehner tapped to have a seat at the table during daily leadership discussions about the "fiscal cliff." The speaker also shared a draft of his first postelection speech on the issue with the Wisconsin congressman.

It wasn't always so. Ryan had been working on versions of his budget plan since 2007, and assiduously promoted the proposal in speaking tours and opinion pieces. But Republicans saw the provisions as potentially poisonous, particularly the revamping of Medicare to a system based on "premium support" payments — effectively a voucher to purchase private insurance that would not necessarily cover the cost.

But after the wave of Republican victories in 2010, which swept the GOP into the majority in the House and Ryan into the chairman's seat of the Budget Committee, he convinced his colleagues to "lead with our chin." Confident that an aggressive stance on the budget deficit would resonate with voters, House Republicans passed versions of Ryan's plan in 2011 and 2012.

When Ryan was tapped as Romney's vice presidential pick in August, Democrats were eager to bring the Ryan budget and its entitlement overhaul onto center stage. But Romney declined to embrace his running mate's more controversial proposals. And Ryan, whose plan was not the GOP's main focus in the campaign's final months, even criticized the president for Medicare cuts that were included in his own budget.

On Monday, Ryan was among seven top Republicans to sign the GOP proposal.

And there were signs Tuesday that Ryan intended to try to shape a broader postelection identity. In a speech at the Jack Kemp Foundation, his first major address since the election, Ryan did not mention his budget plan in prepared remarks, but instead urged Republicans to articulate a plan to combat poverty.

"We have a compassionate vision based on ideas that work — but sometimes we don't do a good job of laying out that vision," Ryan said. "We need to do better."

But Ryan's House colleagues remain confident that he will revive elements of his plan when the time to craft a new proposal arrives. "Wait until April," said freshman Rep. Trey Gowdy (R-S.C.), a Ryan partisan who has called him, only partly in jest, Budget Committee chairman "for life."

Kathleen Hennessey in the Washington bureau contributed to this report.

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