Hope for compromise recedes as budget debate begins

CNN News Wire | 3/13/2013, 11:50 a.m.

The proposal included a $100 billion economic stimulus package for road and bridge repairs, as well as worker training, that Murray said would be paid for by curtailing tax breaks for high-income households and corporations.

However, the Senate plan avoided significant changes to popular entitlement programs such as Medicare and Medicaid, which are major drivers of federal deficits.

Republican leaders oppose new tax hikes or revenue and demand substantial overhauls of entitlement programs, setting up another in the litany of congressional impasses of recent years.

At the White House, spokesman Jay Carney told reporters that Obama's new outreach was intended to find "common ground" on a deficit reduction plan that would include reforms of the tax system and popular entitlement programs.

Obama will introduce his own budget proposal next month, and the president and Democrats concede their approaches would not eliminate annual deficits, as sought by Republicans, but instead reduce them to what they say are manageable levels.

Republicans call such an approach inadequate, insisting that government has become too large and costly to ensure needed economic growth.

Ryan proposed a conservative budget for fiscal year 2014, which begins on October 1. He said it would eliminate the annual deficit in a decade without raising taxes.

It calls for cutting $5 trillion from projected spending increases in the next 10 years while lowering tax rates and getting rid of most of Obama's signature legislation of his first term--the 2010 health care reform law.

Ryan also revived his proposal to reform Medicare, the health care program for senior citizens that is considered the biggest driver of rising federal deficits as costs increase and more Americans become eligible.

The idea was a major issue in last year's presidential election, in which Ryan was the vice presidential candidate on the GOP ticket that lost to Obama.

It calls for offering senior citizens a choice between traditional fee-for-service Medicare and a premium support system that would provide a fixed government payment to help them buy private health insurance. The plan would take effect in 2024 to exempt people 55 and older today.

Both sides reverted to harsh rhetoric from last year's election campaign in defending their deeply entrenched positions on Wednesday.

Ryan referred to "job-killing tax increases" pushed by Obama and Democrats, saying his push for less government and lower tax rates would benefit economic growth.

"What we're saying, like we said before, is we can hit these same revenue numbers without killing jobs," he contended, adding that budgets were all about priorities and choices.

Democrats responded that the Ryan proposal would harm economic growth by shifting the burden of deficit reduction to middle-class Americans, the elderly and others, while cutting spending for college loans, infrastructure development, scientific research and other areas vital for job creation.

"It is not consistent with American values. It is not fiscally responsible," argued Rep. Kathy Castor, D-Florida.

In the ABC interview, Obama took aim at the choices in Ryan's budget plan.

"If you look at what Paul Ryan does to balance the budget, it means that you have to 'voucherize' Medicare, you have to slash deeply into programs like Medicaid, you've essentially got to either tax middle-class families a lot higher than you currently are or you can't lower rates the way he's promised," the president said.