House approves GOP budget-cutting plan

The House has approved the GOP budget-cutting plan and no Democrats vote for that plan. This new plan would cut $6 trillion in spending by cutting money from Medicade, turn Medicare into a voucher program and lower top tax rates to a maximum of 25%.

By Robert Schroeder
April 15, 2011, 3:44 p.m. EDT
MarketWatch

No Democrats vote for plan to slash $6 trillion in spending

WASHINGTON (MarketWatch) — A Republican plan to cut about $6 trillion in government spending over the next decade cleared the House of Representatives on a party-line vote Friday, with GOP lawmakers touting its make-over of entitlement programs and its tax reforms, and Democrats blasting the legislation.

The GOP blueprint — offered by House Budget Committee Chairman Paul Ryan of Wisconsin — would squeeze billions of dollars from Medicaid, transform Medicare into a voucher program and lower top individual and corporate tax rates to a maximum of 25%.

Democrats call the Republicans’ plan, dubbed “The Path to Prosperity,” the “Road to Ruin” for essentially privatizing Medicare and lowering the U.S. corporate tax rate from its current level of 35%. President Barack Obama slammed the bill after it passed Friday.

Republicans rallied behind the plan’s $6.2 trillion in cuts over the next decade, compared with Obama’s fiscal 2012 budget.

The vote was 235-193. No Democrats voted for the plan and four Republicans broke with their party to vote “no.”

Invoking the $14 trillion U.S. debt, Rep. Jeb Hensarling, a Texas Republican, said, “It’s time to quit spending money we don’t have.”

Passage by the Republican-led House was assured, but the Ryan plan faces near-certain death in the Senate, where Democrats hold the majority. Still, the Wisconsin congressman’s blueprint defines the Republicans’ position in a battle with Obama and Democrats that will resonate through the 2012 elections.

A vote on raising the U.S. debt ceiling is coming soon. Republicans have been clamoring for deficit-reduction measures to accompany a hike in the country’s borrowing limit, and on Friday, Obama indicated he’d meet them at least partway.

House Speaker John Boehner is “absolutely right that it’s not going to happen without some spending cuts,” Obama said in an interview with the Associated Press.

Treasury Secretary Timothy Geithner has warned that the U.S. will hit its $14.3 trillion borrowing limit no later than May 16, but could hold off hitting the ceiling until early July by using special measures.

Meanwhile, Obama and his party are digging in and defending Medicare and Medicaid, and the president is also pressing for taking tax breaks from wealthy earners to help shrink the U.S. budget deficit.

The House Republican plan approved Friday would “turn back the clock on a fair deal for the American people,” said Rep. Chris Van Hollen of Maryland, the top Democrat on the House Budget Committee.

On Wednesday, Obama staked out a plan to save the government $4 trillion in 12 years or less. Read more about the president’s deficit-cutting vision.

Friday afternoon, Obama dismissed the House Republicans’ plan through his spokesman.

“The House Republican plan places the burden of debt reduction on those who can least afford it, ends Medicare as we know it, and doubles health care costs for seniors in order to pay for more than a trillion dollars in tax cuts for millionaires and billionaires,” said White House spokesman Jay Carney.

The legislation approved on Friday isn’t binding. Instead, it’s a blueprint for making detailed legislation later in the year. The resolution doesn’t require signature by the president.

Robert Schroeder is a reporter for MarketWatch in Washington.

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