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The Path to Prosperity Builds on the Success of the Fiscal Commission

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Washington, Apr 12, 2011 | comments

Fiscal Commission Co-Chair Erskine Bowles: President Obama’s Budget goes “nowhere near where they will have to go to resolve our fiscal nightmare” (February 14, 2011 - http://www.washingtonpost.com/wp-dyn/content/article/2011/02/13/AR2011021302969.html)

Fiscal Commission Co-Chairs Erskine Bowles and Alan Simpson: “The budget released this morning by House Budget Committee Chairman Paul Ryan is a serious, honest, straightforward approach to addressing our nation’s enormous fiscal challenges. We applaud him for his work in putting forward a proposal which will reduce the country’s deficit by approximately the same amount as the plan of the President’s Fiscal Commission.” (April 5, 2011 – http://thehill.com/blogs/congress-blog/economy-a-budget/154033-paul-ryans-budget-is-a-positive-step-)

 

Fiscal Commission and The Path to Prosperity: Side by Side

 Provision  Fiscal Commission  The Path to Prosperity  Notes
Long Term Reforms
Medicare Reform
Recommends a capped growth rate for Medicare. Provides various options -- including a pilot premium-support system -- that Congress could try to keep growth below that level.

Shifts Medicare to a premium support system for those 54 and younger, modeled after the bipartisan Rivlin-Ryan plan and included as an option by the Fiscal Commission to ensure that Medicare remains solvent.

Key divergence number one: The Path to Prosperity goes beyond savings targets by providing credible, specific reforms that fight skyrocketing costs, make Medicare more progressive, and save the program for future generations.
"Doc Fix" Calls for reforming the Medicare sustainable growth rate for physician payments and fully offsetting the cost. Calls for reforming the Medicare sustainable growth rate for physician payments and fully offsetting the cost.  
CLASS Act Calls for reform or repeal of the CLASS Act.  Repeals the CLASS Act.  
Medicare Fraud Recommends increasing the ability of the Center for Medicare Services to combat waste, fraud, and abuse by providing the agency with additional statutory authority and increased resources. Funds targeted increases in anti-fraud accounts, saving $26 billion in waste, fraud, and abuse in the Medicare, Medicaid, Unemployment Insurance, Supplemental Security Income, and Disability Insurance programs.  
Medical Malpractice Reform Calls for common-sense curbs on abusive and frivolous lawsuits, saving $17 billion through 2020. Advances common-sense curbs on abusive and frivolous lawsuits, saving $30 billion over ten years.  
Medicaid Reform

Recommends a capped growth rate for Medicaid. Allows expedited application for Medicaid waivers in well-qualified states.

Secures the Medicaid benefit by converting the federal share of Medicaid spending into a block
grant tailored to meet each state’s needs, indexed for inflation and population growth.
Key divergence number two: The Path to Prosperity goes beyond savings targets and waivers by freeing states to use a fixed but steadily growing allotment of federal Medicaid dollars to design programs that meet the needs of their unique populations.
President's Health-Care Law Assumes the implementation of a new, open-ended health care entitlement for non-elderly, non-impoverished Americans. Repeals the architecture of the government takeover of health care to clear the way for patient-centered reforms. Key divergence number three: The Path to Prosperity recognizes that the open-ended health care entitlement created by the new health care law is fiscally unsustainable and repeals it.
Social Security Reform Provides comprehensive solution, including a more progressive benefit structure, increases in the retirement age, and increases in the taxable maximum. Reforms a current-law trigger such that if Social Security is not in actuarial balance, the President and both Houses of Congress must put forth reform plans.  Points towards provisions in the Fiscal Commission's plan as positive steps forward.  
Tax Reform
  Reduces income tax rates by broadening the base. Commission option sets top individual and corporate rates at 28 percent. Allows revenue as a share of GDP to rise to 21 percent. Reduces income tax rates by broadening the base.  Sets top individual and corporate rates at 25 percent. Tax reform is revenue-neutral and keeps revenue as a share of GDP within the historical range of 18 to 19 percent. Key divergence number four: The Path to Prosperity keeps revenue as a share of GDP from rising above the post-World War II average, in observance of the fact that Washington has a spending problem, not a revenue problem.
Government Reform
Attrition Policy Provides for a 10 percent reduction in the Federal workforce. Provides for a 10 percent reduction in the Federal workforce.  
Federal Pay Freezes federal pay through 2015. Freezes federal pay through 2015.  
Other Mandatory
Federal Benefits Equalizes the cost sharing of the Federal Basic Benefit between the employee and the employing agency;  uses the highest five years of earnings in determing civil service pension benefits; defers COLAs for retirees in the current system until age 62. Equalizes the cost sharing of the Federal Basic Benefit between the employee and the employing agency.  
Agriculture Spending Reduces spending on mandatory agriculture programs by $10 billion from 2012 through 2020.  Recommends that savings should be drawn from reforms in the direct-payment, conservation, and export-assistance programs. Reduces spending on mandatory agriculture programs by nearly $30 billion from 2012 through 2021.  Recommends that savings should be drawn from reforms in the direct-payment, crop insurance, and export-assistance programs.  
Education Spending Eliminates in-school subsidies in Federal Student Loan programs. Eliminates in-school subsidies in Federal Student Loan programs.  
PBGC Reform Provides PBGC authority to increase premiums. Saves $8 billion over ten years according to CBO. Calls for reform of PBGC.  Assumes outlay savings of $2.7 billion over ten years.  
FCC Spectrum Extends FCC spectrum auction authority. Extends FCC spectrum auction authority.  
Federal Real Property Sales Sells excess federal property. Sells excess federal property; streamlines asset-sale process; calls for enforceable targets for asset sales.  
Discretionary Spending
Non-Defense Freezes spending in 2012 at 2011 levels, returns to 2008 levels in real terms by 2013. Limits future discretionary growth to half of projected inflation through 2020. Reduces non-security discretionary spending to below 2008 levels in 2012, freezes for five years, grows with inflation thereafter.  
Defense Requires equal percentage cuts from Defense and non-Defense. Assumes Secretary Gates levels for the Department of Defense.  
Process Reforms
Discretionary Caps Includes enforceable caps on discretionary spending. Includes enforceable caps on discretionary spending.  
Long-term Budgeting Establishes a debt-stabilization process. Includes overall spending caps for long-term spending.  
 
 
To learn more about House Budget Committee Chairman Paul Ryan’s views on the National Commission on Fiscal Responsibility and Reform: http://budget.house.gov/News/DocumentSingle.aspx?DocumentID=217405



















































































































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