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State economics: Budget recipes

growth in entitlement spending

President Obama continues to dine with GOP politicians and everyone with a budget plan has hit the news circuit. The word “entitlements” is on everyone’s lips. But to what end? Do you need a degree in the “dismal science” to parse the competing budget plans?

Below you’ll find links to the actual proposals and a collection of comparative analyses.

The Democratic Plan: “Foundation for Growth: Restoring the Promise of American Opportunity”

This plan, presented by the head of the Senate Budget Committee Patty Murray, includes $100 billion in targeted jobs and infrastructure package; $975 billion in spending cuts, including $242 billion in saved interest payments; and $975 billion in deficit reduction by “closing loopholes and eliminating wasteful spending in the tax code.”

Counting the $2.4 trillion already passed by the Obama Administration, Murray argues that she surpasses the $4 trillion target set by the Simpson-Bowles Commission in 2010.

The House Republican Plan: “The Path to Prosperity: A Responsible, Balanced Budget”

Commonly known as “The Ryan Plan,”  after the Committee chair and former Vice Presidential candidate Paul Ryan, this plan deems to reduce the deficit by $4.6 trillion over the next 10 years. More than half of those reductions $2.7 trillion – come from cuts to big health-care programs like Medicaid and Obamacare expansions. The plan includes “simplifying the tax code to make it fairer” and substantially lowering tax rates for individuals, “with a goal of achieving a top individual rate of 25%.” The ‘Ryan plan’ does leave the door open for some new tax revenue, but does not include specifics.

Updated Simpson-Bowles Plan: “The Moment of Truth Project”

Taking as its base the “Moment of Truth” report from the President Obama’s bipartisan National Commission on Fiscal Responsibility and Reform, is a project of  the non-profit Committee for a Responsible Federal Budget. The budget, presented to the public by Erskine Bowles and Alan Simpson, who headed the President’s commission, calls for an additional $2.4 trillion of deficit reduction over the next ten years.

Roughly one quarter of the deficit reduction should come from health care reforms, another quarter from tax reform. The remaining savings should come from mandatory spending cuts, discretionary caps, and changes like chained CPI for inflation-indexed provisions in the budget.

The Republican Study Committee: “Back to Basics: A Budget for Fiscal Year 2014″

This plan aims to balance the budget in four years and raise the retirement age to 70. The proposal would make deep cuts to discretionary spending, capping the level at $950 billion – the 2008 level — and freezing it there until the budget is balanced.

President Obama’s Budget:

Although it will reportedly seek many of the same proposals as last year’s $3.8 trillion budget, the President’s plan will not be submitted until the week of April 8 — more than two months past due. For further reading, we recommend the Congressional Budget Office, which has a very detailed analysis of President Obama’s 2013 budget.

Additional reading

Patty Murray vs. Paul Ryan, in one chart, Wonkblog, The Washington Post, March 12, 2013.

Opening bids: Congress finally restarts the budget process, The Economist, March 16, 2013.

Budget Battles Aren’t Just About Money, but Different Visions of Government, PBS NewsHour, March 21, 2013.

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