Rep. Paul Ryan (R-Wis.) unveiled the Republican alternative to the Obama-Spratt budget today, saying the GOP’s plan offered lower spending, deficits, taxes, and debt while producing more jobs.
While Ryan acknowledged Obama inherited the fiscal crisis, he said the focus should be on whether the president’s budget is fixing the crisis or making it worse.
“We believe that the president’s budget…makes our fiscal crisis much, much worse,” Ryan said. “It is not enough for us to just criticize; we must also propose a better way forward.”
Ryan’s plan would create 2.1 million more jobs than the Democrats’ budget. The plan lowers corporate tax rates from 35% to 25%, thereby making the United States competitive with the rest of the world and giving businesses incentive to invest here. The number was recommended by both Meg Whitman and Mitt Romney at Republican hearing on Capitol Hill in January, when Ryan asked them what the number should be.
“Whether we like it or not, we are in a highly competitive, 21st century global economy, and we will either lead or follow,” Ryan said. “I say we lead.”
Another key component of the GOP budget is suspending capital gains tax through 2010, which means people will not be taxed on their investments (and which is taxed under the Obama plan).
For those who realize that the Obama faux-stimulus has been poorly handled, the GOP alternative rescinds the Democrats’ stimulus package starting in the year 2010 except for unemployment insurance for those who have already lost their jobs. It repeals the extra spending in the omnibus bill (which came in at $410 billion) and takes the government back to levels sustained under the continuing resolution, except for defense and veteran spending.
The Republican budget — which covers a full 10 years, unlike the Democrats’ current proposal, which only covers five — freezes discretionary spending other than national defense and veterans’ health care for five years. It also switches Medicaid to an allotment system, thus giving states and governors more control and the freedom to try innovative ideas. The budget also includes Social Security reforms proposed by Obama’s budget director.
Even the tax code is getting a makeover. The Republican budget simplifies the code by offering taxpayers two options: the current code or a choice-based system with two rates. The first rate is 10% on the first $100,000 for couples or $50,000 for individuals, with 25% above that. Taxes could be filed on a postcard. Ryan also makes the 2001 and 2003 tax reliefs permanent.
The Democrats are currently using the reconciliation process to increase funding for pet project such as health care and cap and trade. In an ironic twist, Ryan’s budget actually proposes the reconciliation process, but for its intended purpose — to curb spending and debt and ask committees to slow down their spending. The budget puts a moratorium on earmarks.
Though some conservatives have voiced concerns that the plan doesn’t go far enough, Ryan’s alternative is still worlds better than the Obama budget.
“We need to show the American people that there’s another way forward,” Ryan said. “If the president’s budget comes to pass, we believe — quantifiably and irrefutably — the next generation is going to have a lower standard of living.”