Sen. Toomey Offers A Budget Resolution
One day after Senate Budget Committee chairman Kent Conrad (D-ND) released a budget resolution based on the Fiscal Commission plan, another Budget Committee member, Sen. Pat Toomey (R-PA) released his own budget. Overall, his budget relies on savings from spending cuts to bring the debt down.
The plan is slightly more aggressive in generating savings than the House Republican budget, reducing debt as a percent of GDP to 55 percent in 2022. Toomey's budget would also bring spending and revenues into balance much quicker than the Ryan budget, creating small surpluses starting in 2020. Spending would be reduced to about 18.5 percent of GDP due to cuts across federal programs.
|Sen. Toomey's Budget (Percent of GDP)|
On health care, the budget would enact medical malpractice reforms, means-test Medicare premiums, adopt the Ryan plan for Medicare premium-support, and would permanently patch the SGR. It would also block grant Medicaid, freeze the program at 2012 spending levels through 2017, and limit its growth to the rate of inflation thereafter. The budget would also repeal the Affordable Care Act.
For other mandatory spending, the budget would block grant most income security programs and phase in caps such that FY 2020 spending would be $30 billion higher than FY 2007 spending. In total, this proposal would save $440 billion over ten years. Other changes, including federal employee compensation reforms, would save an additional $300 billion.
In terms of discretionary spending, the budget would repeal the sequester for defense, but keeps the initial BCA caps. This would translate into higher defense spending levels than the Ryan budget, which calls for increasing defense spending above the rate of inflation. To compensate for the defense sequester, non-defense spending is lowered to FY 2006 levels and frozen for eight years. In addition, the budget assumes a full withdrawal from Afghanistan and Iraq by 2015.
On taxes, the Toomey plan would reduce all individual marginal tax rates by 20 percent and otherwise would extend the 2001/2003/2010 tax cuts. The rate cuts would be paid for with base-broadening that is not specified, although the plan suggests a Feldstein-MacGuineas-Feenberg-like cap on tax expenditures or a dollar-amount cap. On the corporate side, the budget calls for lowering the top rate to 25 percent, switching a territorial system, and paying for it with unspecified base-broadening.
Sen. Toomey should be applauded for coming up with an aggressive plan to reduce future deficits and for advancing the largely non-existent Senate budget debate that Sen. Conrad is also attempting to move forward. As with the Ryan plan, the concern is with the unspecified base-broadening, but since the Toomey tax cuts are not nearly as sweeping as Ryan's and the spending cuts are greater, this budget would still represent significant savings.