20110405 paulryan 2012budget 54
Flanked by other congressional members, U.S. Rep. Paul Ryan (R-WI) (C), chairman of the House Budget Committee, holds up a copy of the 2012 Republican budget proposal during a news conference April 5, 2011 on Capitol Hill in Washington, D.C. - 

Bob Moon: We haven't even resolved the cliffhanger over this year's budget, but the increasingly urgent negotiations to avert a government shutdown didn't stop Congress from turning to next year's budget.

Republican Paul Ryan chairs the House Budget Committee, and today he proposed a blanket plan to slash spending by more than $6 trillion over the next decade. Much of the savings would come from health care programs for the elderly and the poor: Medicare and Medicaid. At the same time, the plan would cut the top rate for income taxes, for individuals and corporations, to a cap of 25 percent.

Our D.C. bureau chief John Dimsdale explores how Paul Ryan's budget can be so heavy on spending cuts -- and tax cuts.


John Dimsdale: Earlier this year, the president's deficit commission recommended higher taxes to cover growing health and retirement benefits for an aging population. Ryan was a member and he voted no on the commission's final recommendations.

At today's budget unveiling, he said higher taxes would only slow the economy.

Paul Ryan: If you tax something more, you get less of it. If you tax something less, you get more of it. We don't want to tax jobs more. We don't want to tax investment more. We don't want to tax small businesses and entrepreneurs more. We want them to be taxed less so we get more of them.

Another deficit commission member, Alice Rivlin, says that by rejecting tax increases, Ryan's plan cuts too deeply into spending.

Alice Rivlin: I believe that we need more revenues. We can't cut the entitlement programs enough, in the face of this demographic tsunami to get by with no additional revenue.

The Ryan budget cuts top income tax rates for individuals and corporations by nearly a third. And it calls for getting rid of unspecified deductions and loopholes. Tax policy director Michael Linden at the Center for American Progress thinks he knows which ones.

Michael Linden: The biggest ones are the mortgage interest deduction, the state and local tax deduction, the charitable deduction. These are things that benefit the wealthy but they also really benefit the middle class.

Linden says Ryan's tax breaks are the reason that Medicare, Medicaid and other government programs have to radically slashed in his budget.

In Washington, I'm John Dimsdale for Marketplace.