US & Canada

Paul Ryan unveils House Republican budget

Paul Ryan presents his budget plan during a press conference at the US Capitol 12 March 2013
Image caption Representative Paul Ryan called the proposal "an invitation" to the president and Democrats: "Show us how to balance the budget," he said.

House Republicans have begun the latest round of US fiscal negotiations by unveiling a budget proposal that aims to cut through the social safety net.

The plan, introduced by Representative Paul Ryan, is similar to previous budgets he has put forward. He said it would cut $4.6tn (£3tn) over 10 years.

But White House spokesman Jay Carney said of the Ryan plan in a statement: "The math just doesn't add up."

Senate Democrats plan to offer a rival budget with both cuts and tax rises.

Former vice-presidential candidate Mr Ryan said his plan would stop the US government living beyond its means.

"We're introducing a budget that balances in 10 years - without raising taxes,'' Mr Ryan said in a Wall Street Journal op-ed about the plan.

The Wisconsin Republican's plan includes tax revenues gained over that time-span as part of a last-minute deal pushed by the White House on 1 January that raised taxes on incomes over $400,000.

Budget deadline

Both Democrats and Republicans recognise that neither budget is likely to pass both the House and the Senate. But the plans outline the priorities of each party amid wider negotiations to pass a budget by 27 March.

That deadline is when the current resolution funding the US government expires.

During a press conference on Tuesday, Mr Ryan called his plan an invitation to Democrats and the White House "to come together to fix these problems".

His budget proposal finds significant parts of its projected savings in healthcare costs.

It seeks to repeal President Barack Obama's healthcare reform law and cut spending on Medicaid, a government health programme for the poor, by giving control of its distribution to states.

But correspondents say it is highly unlikely that healthcare reform can be repealed.

The budget committee chairman has also reintroduced a proposal that replaces traditional Medicare, a government healthcare programme for the elderly, with a government subsidy to buy health insurance for those currently under 55.

Critics of the plan say the subsidies will not grow with inflation fast enough, raising the annual price of insurance for seniors.

The budget preserves more than $700bn in the Obama healthcare reform law's cuts to Medicare providers over a decade.

Also included are about $1tn cuts to domestic programmes.

While the document released on Tuesday does not go into specific detail on where those cuts would come from, it assumes day-to-day spending significantly lower than levels called for by across-the-boards cuts, known as the sequester, that went into effect on 1 March.

Defence spending would be lower than previous budgets passed by the House, but higher than amounts expected if the sequester remains in place.

Despite the sharp cuts, Mr Ryan estimates the proposal increases spending by 3.4% instead of the 5% currently projected.

Subsidising millionaires?

The Senate plan, to be unveiled on Wednesday by Democratic Senator Patty Murray, is expected to call for new tax revenues through ending certain tax loopholes and other tax benefits to the wealthy.

"At a time when we absolutely must cut where we can, looking at ways we can close special tax breaks that aren't targeted to help the middle class or our economy just makes sense," Sen Murray said at a hearing last week.

"There's no good reason, for example, that taxpayers currently subsidise millionaires more, when they purchase a second home, or a yacht, than they do middle-class families purchasing their first home."

Republicans have also called for closing certain loopholes in the tax code, but would use the savings to reduce tax rates.

Sen Murray's budget is also expected to include spending cuts equivalent to revenue raised over 10 years.

The expected Senate budget proposal is the first since 2009. A series of continuing resolutions - essentially stop-gap measures - have served as the US budget through various political battles over reducing the country's deficit.

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