GOP House budget sets up next spending, Medicare fights

Rep. Paul Ryan, R-Wis., speaks during a listening session April 26, 2011, at Gateway Technical College in Kenosha, Wis.
AP Photo

Updated at 11:45 a.m. ET

House Budget Committee Chairman Paul Ryan on Tuesday released his proposed 2013 budget, calling for steep spending limits and dramatic changes to Medicare -- setting up more contentious partisan battles in Congress.

The Republican budget calls for $1.028 trillion in discretionary spending in 2013 -- below the $1.047 trillion spending cap Democrats and Republicans agreed to in a debt deal last August. By calling on his party to push for even further spending limits, Ryan could be creating the conditions for another budget battle and possible government shutdown at the end of September, Democrats say.

"We are here to offer Americans the chance to choose which future they want for themselves," Ryan said today upon unveiling his plan, comparing it to President Obama's proposed 2103 budget, "the president's path of debt and decline, or a path to renew prosperity for Americans."

The proposal would balance the budget by 2040, Ryan argues, and lead to federal government surpluses.

"We want to get ahead of a debt crisis," Ryan said Tuesday on "CBS This Morning." "We want to take all of the empty promises that our government is making and make sure that they're not broken promises." (Watch in the video above)

As he did in last year's proposed budget, Ryan once again proposes significant changes to Medicare, the popular government-run health care program for seniors. Last year's House GOP budget became a lightening rod for criticism of the GOP, spurring Democrats to charge that Republicans wanted to essentially end Medicare.

This year, Ryan's plan is modeled after a bipartisan proposal (which Ryan crafted with Democratic Sen. Ron Wyden of Oregon) -- though it still calls for significant changes many Democrats oppose. Starting in 2023, the plan would give seniors subsidies to purchase either private insurance or traditional, government-run insurance on an exchange. Democrats opposed to the plan argue that private insurers would reject sick customers, turning Medicare into a dumping ground for those with the greatest health care needs. Under Ryan's plan, no one over 55 would see any changes to Medicare they now receive or expect.

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Almost immediately after Ryan unveiled his proposal, the White House slammed it as "wrong-headed," charging that it "fails the test of balance, fairness, and shared responsibility."

The Ryan plan would preserve "taxpayer giveaways to oil companies and breaks for Wall Street hudge fund managers," White House Communications Director Dan Pfeiffer said in a statement, and "would end Medicare as we know it, turning the guarantee of retirement security into a voucher that will shift higher and higher costs to seniors over time."

On "CBS This Morning," Ryan insisted that it's feasible to give seniors the option of private insurance alongside the traditional Medicare choice. He said Democratic complaints amount to "scare tactics."

"The country wants to be spoken to like adults, not pandered to like children," he said.

While introducing the proposed budget, Ryan called his plan "the most common sense and bipartisan way" to preserve Medicare while slamming Mr. Obama for cutting $500 billion from the program in his 2010 health care overhaul.

In another dismissal of last year's debt deal, the Ryan budget would repeal the $55 billion in Defense cuts expected to come from the agreement. Instead, the proposal sets Defense spending at $554 billion and calls for various congressional committees to find spending cuts in areas like health care or federal pension reforms to make up for the lost Defense cuts.

Ryan's proposed budget takes a number of other dramatic steps, such as creating just two income tax brackets at 10 and 25 percent, as well as bringing the corporate tax rate down from 35 percent to 25 percent. The plan would eliminate the Alternative Minimum Tax and scrap most taxes on overseas profits. The AMT was set up more than 40 years ago to ensure that no one avoided taxes entirely, but it is now catching many middle-class Americans.

Ryan's budget could pass in the House, where Tea Party conservatives have aggressively pushed for dramatic spending decreases and encouraged GOP leaders to pass Ryan's budget last year. However, the budget would surely fail in the Democrat-led Senate, and President Obama would almost certainly reject it. Republicans roundly panned Mr. Obama's proposed 2013 budget, which he released last month.

Still, the Ryan plan serves as a marker of House Republican priorities and a starting point for negotiations over an actual budget. The House Budget Committee is expected to take the proposal up for debate and vote on it by Wednesday, with the intention of setting up a full vote in the House by next week.

Ryan budget also includes a number of other partisan efforts, such as a repeal of the Affordable Care Act, Mr. Obama's 2010 health care overhaul, as well as cuts to the federal workforce. It calls for the expansion of domestic oil drilling and reforms to food stamp programs and Medicaid.

Ryan said today that he "absolutely" expects the eventual 2012 Republican presidential nominee to embrace his budget plan, saying, "Whoever is going to be the nominee owes the country a choice of two futures."

House Speaker John Boehner in a statement applauded Ryan's budget for planning on "putting Americans back to work, protecting our seniors, and closing President Obama's massive budget deficits."

House Democratic leader Nancy Pelosi, meanwhile, said Americans would reject the plan. "Republicans must work with Democrats to preserve and strengthen Medicare, not dismantle it," she said in a statement. "We must act to create jobs and grow our economy."

With reporting from CBS News Capitol Hill correspondent Jill Jackson.