UPDATED - Some Likely Details of House GOP Budget Proposal

March 20, 2012 12:50 AM
 

via a special arrangement with Informa Economics, Inc.

House Republicans set to release FY 2013 budget proposals


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


Update: House GOP budget cuts target farm bill spending: $33 billion in cuts The coming GOP Fiscal Year 2013 budget proposal will reportedly ask for $33 billion in agriciulture cuts (farm bill) over ten years, and the House Agriculture Committee will be one of six committees tasked to report by May 1. If confirmed, the $33 billion in ag-related budget cuts would be the same level of cuts that Vice President Joe Biden and House Majority Leader Eric Cantor (R-Va.) talked about last year.


House Budget Chairman Paul Ryan (R-Wis.) will lead the discussion this morning in unveiling the latest House GOP budget plan, details which will prove controversial with the Democratic Party, especially in an election year. The House Budget Committee plans to markup the proposal on Wednesday, and could see a House floor vote next week.

Click here to read the GOP budget plan.

The following are some likely features of the coming budget plan:

  • Only two tax rates, 10% and 25%. The plan, for now, does not specific the income levels falling into the two brackets. The current tax system has six individual tax breaks, with a top marginal rate of 35%.

  • Elimination of the Alternative Minimum Tax (AMT), which was initially designed to prevent high earners from using deductions to only pay negligible taxes.

  • Elimination of some current tax breaks (not specified), to help avoid tax income from plunging.

  • Top corporate tax rate lowered to 25%, from current 35%.

  • Changes for US taxes on American corporations' earnings from overseas operations. US firms now pay the tax rate of the country where the overseas operation is located and then, if the profits are brought back to the US, companies often pay some US taxes as well. Under the latest GOP proposal, companies essentially would pay just the tax rate of the country where the profits are earned. (Some Republicans have pushed a 5.25% tax rate for foreign earnings brought back to the US.)

  • FY 2013 discretionary spending level of $1.028 trillion, $19 billion lower than the $1.047 trillion ceiling reached in negotiations last August.

  • Avoiding across-the-board cuts: The proposal will instruct committees to find ways to avoid the automatic spending cuts included in the Budget Contract Act (BCA) agreement.

  • Overhaul of Medicare: An option would require future seniors to use subsidies to buy into the current public program or a private plan.

It did not take long for some Senate Democrats to issue a reaction to the conjectured GOP proposal. "We believe that ignoring the Budget Control Act (BCA) represents a breach of faith that will make it more difficult to negotiate future agreements," wrote Sens. Kent Conrad (D-N.D.) and Daniel Inouye (D-Hawaii), in a letter to House leaders. "Rather than trying to tear down the BCA, we should be holding it up as an example of what can be accomplished if we are willing to set aside our differences and work hard to find bipartisan solutions to our nation's challenges." The letter also said the GOP budget action would "significantly increase the likelihood of omnibus legislation."

Sen. Conrad is planning to file a resolution on Tuesday, setting the FY 2013 spending limits at the $1.047 trillion ceiling in the BCA.

House Democrats to offer budget alternative. House Budget Ranking Member Chris Van Hollen (D-Md.) has previously stated that should Republicans issue a plan below the FY 2013 discretionary spending cap reached last August, Democrats would put out a competing proposal to highlight differences in priorities.


Comments: If you think most of this is just politics, you are right. Neither the House (GOP) nor Senate (Dems) plan will be approved by both chambers. This is really a marker for the coming elections to show how the two political parties differ on key budget issues. Let the voting begin.


 

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


 


 

 

 

 

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