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House passes sweeping GOP budget cuts, reforms

By Alan Silverleib, CNN
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'Hands off my Medicare'
  • The House passes Rep. Paul Ryan's 2012 budget plan
  • The plan would dramatically change Medicare and Medicaid
  • Ryan's plan has little chance of clearing the Democratic-controlled Senate
  • President Obama's budget plan doesn't significantly change Medicare and Medicaid

Washington (CNN) -- The House of Representatives passed the Republican leadership's 2012 budget proposal Friday, approving a blueprint for cutting federal deficits by roughly $4.4 trillion over the next decade while radically overhauling Medicare and Medicaid -- two popular entitlement programs long considered politically untouchable.

The bill passed 235-193 in a near party-line vote. Every Democrat opposed the measure.

The measure, which is bitterly opposed by President Barack Obama, has virtually no chance of clearing the Democratic-controlled Senate.

It is time "to get serious about the long-term crisis our country is facing," said House Speaker John Boehner, R-Ohio. Boehner said he was "hopeful the president will take his job as seriously as we're taking ours."

Republicans "are out to destroy Social Security, Medicare and Medicaid," charged Rep. John Larson, D-Connecticut. This "is a time to draw a line in the sand and fight. ... We will keep their hands off of Medicare and the sacred contract that we have with the people we are sworn to serve."

White House Press Secretary Jay Carney said the plan "places the burden of debt reduction on those who can least afford it (and) ends Medicare as we know it."

Several spectators were forcibly removed from the House gallery shortly before the vote for yelling and generally disrupting the chamber's proceedings.

Obama unveiled his own deficit reduction plan earlier in the week, calling for cutting deficits by a combined $4 trillion over the next 12 years without significantly changing any of the major entitlements.

Leaders of the two parties are expected to engage in a series of contentious, politically charged debates over the next several months over how best to contain the country's skyrocketing debt.

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  • Federal Budget
  • Medicaid
  • Medicare

The GOP proposal, drafted by Budget Committee Chairman Paul Ryan, R-Wisconsin, would overhaul key portions of the tax code, dropping the top rate for individuals and businesses to 25% while eliminating a number of loopholes.

Domestic discretionary spending -- the share of the budget not devoted to entitlements -- would remain frozen below 2008 levels. Overall spending would be reduced by approximately $6 trillion over the next 10 years.

The most contentious parts of Ryan's blueprint, however, revolve around its proposed changes to Medicare and Medicaid. Medicare, a major contributor to spiraling federal deficits, would be overhauled starting in 2022. The government would no longer directly pay bills for senior citizens in the program. Instead, recipients would choose a plan from a list of private providers, which the federal government would subsidize.

Individuals currently 55 or older would not be affected by the changes. Who pays for Obama's Medicare plan?

Medicaid, which provides health care for the disabled and the poor, would be transformed into a series of block grants to the states. Republicans believe that state governments would spend the money more efficiently and would benefit from increased flexibility, while Democrats warn that such a move would shred the health care security provided to the most vulnerable Americans in recent generations.

Obama's plan, in sharp contrast to Ryan's, would repeal the Bush-era tax cuts on families making more than $250,000 annually, something sought by Democrats but strongly opposed by Republicans.

The president has also called for the creation of a "debt fail-safe" trigger that would impose automatic across-the-board spending cuts and tax changes in coming years if annual deficits are on track to exceed 2.8% of the nation's gross domestic product.

Administration officials have claimed that by building on or adjusting the health care reform bill passed last year, $480 billion would be saved by 2023, followed by an additional $1 trillion in the following decade. Obama has proposed tightly constraining the growth in Medicare costs starting in 2018.

The rhetoric over the two leaders' respective plans has become increasingly heated in recent days.

"We can't get everything the government offers and not pay for it," Obama said this week in an interview with ABC. "Either we don't pay for it -- in which case we have a society that is not caring for our seniors the way it should, is not providing some basic security for people who really need it, and is not investing in the future -- or we can decide to continue on the path that has made us the greatest country on Earth.

"Make those investments. Have a basic social safety net. And we can do it without hurting the middle class or fundamentally changing these programs."

Earlier, Democratic Sen. Charles Schumer of New York said the Ryan plan would lower the tax rates on America's wealthy to the lowest levels "since 1931, when Herbert Hoover was president."

"Talk about trying to turn back the clock," said Schumer, who also pledged that "no plan to end Medicare as we know it will ever, ever pass the Senate."

Ryan, meanwhile, ripped Obama on Thursday for using "demagogic terms and comparisons."

The president's plan is "fundamentally unserious," Ryan said. Obama has brought himself "down to the level of the partisan mosh pit" and made it tougher for the two parties to reach an agreement, he said.

Despite their sharp differences, Democratic and Republican leaders were able to reach an agreement late last week on a budget covering the remainder of the current fiscal year, which ends September 30. The deal reduces spending by roughly $38 billion.

While wrestling with the budget, political leaders also have to contend with an impending vote to raise the nation's debt ceiling. Congress needs to raise the limit before the federal government reaches its legal borrowing limit of $14.29 trillion this year or risk a default that could result in a crashing dollar and spiraling interest rates, among other things.

GOP leaders have stressed that any vote to raise the cap has to be tied to another round of spending cuts or fiscal reforms.

The administration, in contrast, has called for a "clean" vote on the cap, which would raise the limit without adding any conditions. Democrats warned their GOP counterparts not to play a game of "chicken" with the economy.