House Republicans and Senate Democrats are rolling out their budget proposals this week as the two political parties lay down markers for what is expected to be a prolonged fight over taxes and spending. President Barack Obama has not yet released his budget proposal, but the White House says he is likely to offer one in early April.
Legislation passed by Congress over the past two years will reduce deficits by roughly $2.4 trillion over the next decade — two-thirds from spending cuts and one-third from more taxes. All the plans, however, would replace recently enacted across-the-board spending cuts known as the sequester with cuts that are more targeted.
House Republican plan:
— Cuts spending by $4.6 trillion over the next decade, balancing the budget by 2023 with no tax increases.
— Entitlements: Replaces traditional Medicare for people now under 55 with a government subsidy to buy health insurance on the open market, and calls on both the president and Congress to address Social Security without offering specifics. The plan would repeal Obamacare but preserve more than $700 billion in the health care law's cuts to Medicare providers over a decade.
— Taxes: Calls for an overhaul of the tax code but does not increase revenue, except through economic growth. The plan incorporates more than $600 billion in tax increase enacted in January.
Senate Democratic plan:
— Reduces government borrowing by $1.85 trillion over the next decade with roughly equal amounts of spending cuts and tax increases; does not produce a balanced budget.
— Entitlements: Includes $275 billion in cuts to Medicare providers over the next decade but does not cut benefits.
— Taxes: Calls for an overhaul of the tax code that generates $975 billion in additional revenue over the next decade by "closing loopholes" in the tax code that benefit wealthy Americans and big corporations.
— Erskine Bowles and Alan Simpson, who co-chaired Obama's deficit committee in 2010, updated their deficit reduction plan in February, calling for $2.4 trillion in deficit reduction over the next decade. About three-fourths of the savings would come from spending cuts and the rest — about $600 billion — would come from tax increases.
— Entitlements: Reduces payments to Medicare and Medicaid providers, increases premiums for high earners, and adjusts benefits "to account for population aging," which means raising the Medicare eligibility age, now 65. The proposal would also reduce annual cost-of-living adjustments, or COLAs, for Social Security by adopting a new measure of inflation.
— Taxes: Calls for an overhaul of the tax code that generates additional revenue by reducing or eliminating tax breaks. Some of the money raised by reducing tax breaks would be used to lower overall income tax rates, and some would be used for deficit reduction.