‘We Owe the Country This Choice,’ Ryan Says of Budget Plan
A Republican-crafted budget proposal is as much a political document as it is a fiscal plan to guide the country out of its debt-and-deficit morass, the head of the House Budget Committee told CNBC Tuesday.
After three years of unsuccessful congressional wrangling to get a budget passed, Rep. Paul Ryan acknowledged that this proposal has little chance of adoption. But he said it makes an important statement about the differing directions in which the opposing parties would take the country.
"We think we owe the country an alternative path, a choice for the future," Ryan said in a live interview. "What we're saying to the country is, "Here's our plan for economic growth, for prosperity, for debt reduction, for fiscal consolidation to prevent a debt crisis, and we think we owe the country this choice so they can decide in November which path they want to take."
At its heart, the GOP proposalgets rid of the multiple tax brackets in the current system and allows for just two income tax rates — either 10 percent or 25 percent.
In addition, the plan scraps the Alternative Minimum Tax, a controversial levy that initially was geared at higher earners, but became a burden on the middle class because it never was indexed for inflation.
Finally, the Republican proposal would get rid of most of the loopholes that have allowed some top earners to skirt their fair share of the tax burden. Doing so, Ryan argued, would allow the government to generate the same amount of revenue as the current system while simultaneously lowering tax rates.
"The smart way to do this is to broaden the base and lower the tax rate, take out of the tax code the tax shelters so you can lower tax rates, and flatten the tax system and wire us for growth," he said.
While the plan could pass the Republican-controlled House, Senate Democrats are likely to resist. They have held fast against plans that don't ensure higher tax rates against bigger earners, favoring the so-called Buffett Rule that establishes a special levy for top-tier millionaires and billionaires.
Ryan cast the Republican plan as the only one that will tame the swelling ratio of debt to gross domestic product .
European nations are in crisis mode after several — most prominently Greece— have reached debt-to-GDP that has approached or exceeded 100 percent, and many in Washington worry that the U.S. is on a similar path.
"It's not enough for us to complain about that," Ryan said. "We're showing the country how we would do things differently so they can choose this year a very clear, sharp contrast and the path to two futures."