The Two Parties Begin Battle Over Budgets, With Healthcare Spending in the Middle

Republicans and Democrats this week will both introduce formal budget proposals for the federal fiscal year 2014 with the goal of reducing the federal deficit over the next 10 years. The wildly different budgets put healthcare spending front and center, especially Medicare and Medicaid.

U.S. Rep. Paul Ryan (R-Wis.) Tuesday presented a House budget on behalf of his party. Ryan’s proposal would cut federal spending by $4.6 trillion over the next ten years and promises a balanced budget by 2024. But it’s the stuff of political fantasy.

Ryan’s plan for healthcare spending is predicated on repealing the Patient Protection and Affordable Care Act – or ObamaCare – and eliminating the Medicare savings already planned in that law and transitioning the federal program to a premium support – or voucher – model.  He also proposes tort reform to limit medical malpractice liabilities. States would also have more control of Medicaid funds, including how to spend food stamp dollars.

Ryan’s plan is officially revenue-neutral, but it proposes sweeping changes to the U.S. tax code, including the elimination of all but two tax brackets (25 percent top rate and a 10 percent bottom rate), abolition of the AMT, and a new corporate tax rate of 25 percent. The tax cuts would be paid for by undefined eliminations of deductions and credits.

While Ryan’s plan is the stuff of pure fantasy, the Democrats’ plan — to be presented by Sen. Patty Murray (D-Wash.) – suffers from a lack of imagination and goals. Murray does not claim that her proposal will ever balance the federal budget. While not officially public (it’s slated to be released Wednesday), those familiar with the plan say it increases revenues by $1 trillion over 10 years while reducing spending by the same amount.

But the specifics of Murray’s plan are intentionally hazy. In fact, many are calling it a broad “blueprint” rather than a true budget proposal. It is expected, however, that any changes to Medicare and Medicaid will be modest, relying on the savings expected in the two programs under the healthcare reform law.