Congress has yet to settle its first budget fight of the year but is already about to move on to an even more consequential fiscal clash.
US Capitol Building with cash
Even as the two parties struggled over the weekend to reach a deal on federal spending for the next six months and avert a government shutdown at the end of the week, House Republicans were completing a budget proposal for next year and beyond. It is likely to spur an ideological showdown over the size of government and the role of entitlement programs like Medicaid and Medicare.
The plan, which is scheduled to be unveiled Tuesday, will be the most ambitious Republican effort since the November elections to put a conservative stamp on economic and domestic policy. It involves far greater stakes for Congress and for President Obama — substantively and politically — than the current fight over spending cuts.
The outcome of that fight was still uncertain on Saturday as Congressional staff members assembled new proposals and the White House said that Mr. Obama had called House Speaker John A. Boehner and Senator Harry Reid of Nevada, the Democratic majority leader, to urge them to find an acceptable compromise. He reminded them that time “is running short.”
The longer-term budget proposal has been led by Representative Paul D. Ryan, a Wisconsin Republican who is the party’s leading voice on budget matters, and will go beyond numbers to provide policy prescriptions.
It will call for deep spending cuts again in 2012, chart a path to reducing the deficit and slowing the growth of the accumulating national debt, and grapple with the politically volatile issue of reining in the cost of entitlement programs, starting with Medicaid, which provides health coverage for the poor.
“We want to get spending and debt under control, and we want to get the economy growing, and we want to address the big drivers of our debt, and that is the entitlement programs,” Mr. Ryan, chairman of the Budget Committee, said in an interview. “We have a moral obligation to the country to do this.”
The efforts of Mr. Ryan, backed by Mr. Boehner and other Republican leaders, are certain to meet serious resistance from the Democratic-led Senate and from Mr. Obama. In many respects, the nasty fight over financing the government for the next six months has been a warm-up for the longer-term budget battle, which could be further inflamed by a debate over raising the federal debt limit.
House Democrats, who are preparing an alternative budget, say the Republican approach would cut off aid to some of the neediest Americans and shortchange education programs vital to staying economically competitive.
“It seems to be the same old, same old,” said Representative Chris Van Hollen of Maryland, the senior Democrat on the Budget Committee. “It is going to be continued big tax breaks for millionaires and big corporate special interests like oil companies and deep cuts in education for kids and health care for seniors.”
“How you get your deficit reduction is important,” Mr. Van Hollen added.
Republicans have been urging Mr. Obama to seize the opportunity provided by a divided government and lead a legislative push to rein in spending on programs like Medicaid, Medicare and Social Security. Emboldened by their election wins and a sense that the public is ready for a new approach, House Republicans say they will push forward on their own and try to draw the president and Senate Democrats into a broader discussion about long-term deficit reduction and the soaring costs of the entitlement programs.
Details of the House budget are being tightly held. But lawmakers and other officials predict serious proposals to change Medicaid and Medicare, with talks continuing about how hard to push for adjustments in Social Security.
“You are going to see major reforms in Medicare and Medicaid; you are going to see a change in the deficit trajectory that is pretty dramatic,” said Representative Tom Cole, an Oklahoma Republican who is on the Budget Committee.
“Ryan isn’t touching the third rail,” Mr. Cole said, employing the expression used to suggest that messing with Social Security and Medicare can be politically fatal. “He is wrapping both hands around it.”
The budget for 2012 and beyond could heighten the partisan tensions surrounding the financing debate for the current year. If Congress cannot settle that issue by Friday, authorization for some government spending will expire and parts of the federal government will be shut down.
Some Republicans had wanted to delay putting forward Mr. Ryan’s plan until this year’s negotiations were completed. They were worried that introducing another set of proposals might confuse the debate and give Democrats two targets to exploit in their effort to persuade voters that Republicans were going too far in slashing programs.
Others argued that the Ryan proposal could help Mr. Boehner gather the Republican votes he needs to get a compromise on 2011 spending through the House. Any deal for the current fiscal year is likely to fall short of what the Tea Party movement and some other fiscal conservatives are demanding, but Republican leaders are already signaling that the big prize is a deep spending cut for next year and a start on reining in the entitlement programs — steps that could involve trillions of dollars over coming decades, as opposed to the tens of billions of dollars on the table in the budget battle for this year.
While Mr. Ryan and top Republican aides would not discuss specifics, there are strong indications that the proposal will draw on deficit reduction plans that Mr. Ryan laid out in his 2010 “roadmap plan” and a second proposal he wrote with Alice M. Rivlin, a director of the Office of Management and Budget in the Clinton administration.
In that plan, Ms. Rivlin and Mr. Ryan proposed that Medicaid financing be converted into a block grant program, with states given a set allotment of money and new discretion to shape health coverage programs for the poor. Their Medicare proposal would allow those nearing eligibility to remain with the current system, and it would create a program that would provide payments to Medicare enrollees to buy private health insurance.
Top Republicans have been divided on how much to tinker with Social Security, given strong Democratic opposition, its less significant contribution to the budget deficit and the political explosiveness of making any changes to the program. Officials say the budget will probably provide guidance on how to shape Social Security based on recommendations from last year’s presidential deficit-reduction committee.
Republican leaders have not previously embraced Mr. Ryan’s proposals on Medicare and Social Security, but Mr. Boehner said he had tired of watching Congress avoid difficult decisions on entitlement programs.
“You can’t continue to whistle past the graveyard,” he said. “We are imprisoning the future for our kids and our grandkids if we do not act, and it’s time to act.”
Democrats said they intended to draw sharp distinctions between their approach and that of Republicans.
“The idea of block-granting and flexibility kind of sounds good, but it is actually code for cutting,” said Representative John Yarmuth, a Kentucky Democrat on the Budget Committee. “It is a license to cut.”
Mr. Ryan promised that his blueprint would be a significant departure from the budget issued this year by Mr. Obama, which made no major recommendations on how to address the big entitlement programs. “The president is not leading; we need to,” Mr. Ryan said. “Otherwise the country has no vision and no option for getting out of this debt crisis that we are going into.”