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Ryan Issues First Budget Salvo With $4.6 Trillion in Spending Cuts to Eliminate Deficit

Like the past two years, Budget Committee ranking member Chris Van Hollen of Maryland will introduce a Democratic plan, one he said would be “on the same page” as the plan Senate Budget Committee Chairwoman Patty Murray of Washington plans to unveil Wednesday as a Democratic alternative in the Senate.

Flat Line for Discretionary Dollars

The Ryan plan would keep discretionary spending virtually flat over the 10-year budget period. Discretionary spending — essentially the operating expenses of the government — would go from $1.114 trillion in the 2014 fiscal year to $1.209 trillion in 2023, for average annual growth of less than 1 percent. Over 10 years, discretionary spending would total $11.3 trillion as measured by outlays, or money as it is spent. That would be $249 billion less than what would be spent if current policies were followed, according to the plan.

The plan did not describe how that spending would be split between defense and non-defense discretionary spending, but a Ryan spokesman said the budget would meet the overall spending caps under the 2011 budget law (PL 112-25) but not abide by the split envisioned in the law between the two spending categories.

Overall, the proposal envisions $41.5 trillion in spending as measured by outlays over the 10-year period, $4.6 trillion less than would be spent under current policies. However, it assumes total revenues of $40 trillion over the decade, the same amount as would be collected under current policy. Ryan had earlier said the $617 billion in new taxes raised by the fiscal cliff law would be included in the plan and would make it easier to achieve balance in 10 years.

Increases in outlays would grow from $3.531 trillion next year to $4.954 trillion, largely from growth in mandatory spending on entitlements, which would expand as a result of inflation and the aging population.

Creating a Surplus?

The result of the budget plan, Ryan says, would be a sharp decline in the deficit, which would slide from $845 billion this year to $528 billion next year and then fall to double digits by 2016 and to a slight surplus in 2023. Ryan has said he is helped in the goal by new revenue and changed economic circumstances since last year, including the $617 billion in tax increases that were part of the fiscal deal struck on Jan. 1. Growing tax receipts are partly behind what the Congressional Budget Office says will be a 22 percent decline this year in the deficit, which has fallen by about a third from its peak of $1.4 trillion in 2009.

For fiscal 2014, the budget would hold combined discretionary and mandatory defense spending to $560.2 billion, as measured by budget authority, which allows obligations to be incurred.

According to a GOP aide, the plan would limit defense discretionary spending to $552 billion in fiscal 2014, the same amount as a cap for that year in the 2011 budget law.

In past years, Ryan compared the House plan to President Barack Obama’s proposed budget. That comparison is not possible yet this year because Obama’s budget is running late and is not expected to be released until early April.

Instead, the GOP plan is compared to a current policy baseline, which is based on the CBO’s current-law baseline, issued in February. Unlike the CBO baseline, the current policy baseline assumes that war and emergency spending will fall by $1 trillion over the decade as U.S. troops leave Afghanistan.

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