In the midst of fighting over this year’s federal budget (Fiscal Year 2011), Representative Paul Ryan (R –WI), Chairman of the House Budget Committee, released the Republican answer to President Obama’s Fiscal Year 2012 budget proposal. The Chairman’s plan, however, reaches far beyond 2012. It would cut spending by $5.8 trillion over the next 10 years (and reduce the deficit by $1.65 trillion), mainly by slashing social safety net benefits and by changing the way the government pays for Medicaid, the nation’s health care program for the poor. To address long-term deficit issues, Chairman Ryan wants to restructure Medicare, the health care program for seniors, while reducing promised benefits for younger generations.
The proposal does not, however, include any increases in revenue, a key difference from President Obama. The latter would allow tax cuts for the wealthiest Americans to expire rather than reduce the social safety net. But Medicare and Medicaid would remain essentially untouched under the President’s plan.
The changes to federal spending proposed by Chairman Ryan would have dramatic effects on young Americans for years to come. Capping discretionary spending below 2008 levels- money that Congress spends on a yearly basis – would limit funding for education and training programs that young people rely on to gain skills, and succeed in the modern economy. Congressman Ryan’s plan would effectively reduce Pell grant funding to pre-recession levels, despite the fact that millions more young people need grants to pay for college in these tough economic times.
Changes to the federal health care programs are even more dramatic. First, the plan calls for completely repealing health care reform. That would have extreme consequences for young people already detailed here. Next, the budget would restructure Medicaid, the health care program for the poor, by eliminating baseline standards and allowing each state to use federal money how it sees fit. Low-income young families on Medicaid would see their benefits reduced as states reduce minimum benefit levels.
Finally, and most controversially, Chairman Ryan’s plan would fundamentally change the way Medicare functions. Those 55 and older would see no changes, but when younger workers reach age 65, they would instead receive a voucher from the federal government to buy health insurance. The size of that voucher, however, will grow more slowly than rising health care costs. As the New York Times points out, Ryan’s budget puts the burden of Medicare cuts completely on the younger generation. Millenials would therefore receive significantly smaller Medicare benefits than today’s seniors.