Paul Ryan's budget 'keeps the Obamacare taxes and spending cuts that paid for Obamacare, but then cuts all of the benefits.
U.S. Rep. Bobby Scott, D-3rd, recently offered a scornful analysis of the federal budget proposal approved by the House of Representatives. In a March 25 radio interview, Scott directed much of his criticism at the author of the plan, Rep. Paul Ryan, R-Wis. 'He keeps all of the Obamacare taxes and spending cuts that paid for Obamacare, but then cuts all of the benefits,' Scott said. We wondered whether Scott's charge is accurate. First, a little background. Ryan is the House Budget Committee chairman and has long called for lower tax rates and reduced federal spending. Scott, a member of the panel, disagrees with the GOP's approach. He supported an unsuccessful budget proposal by the Congressional Black Caucus last month that would have raised $2.7 trillion in new revenues over the next 10 years. Republicans muscled Ryan's spending plan through the House on March 21. It would balance the budget in 10 years by substantially shrinking the government, privatizing Medicare and simplifying the tax code. Ryan's budget, which also would end Obamacare, passed without a single supportive Democratic. The Senate, controlled by Democrats, passed a competing budget plan on March 23 that would raise taxes by $1 trillion over 10 years and leave Obamacare intact. No Republicans voted for the measure. Neither of the plans is likely to be enacted. Instead, they will serve as opening bargaining positions for the House and Senate as they enter budget negotiations. The budgets are based on 10-year revenue projections by the nonpartisan Congressional Budget Office. The CBO is required to make its estimates on the assumption that current tax laws will remain intact, including revenues that would generated by Obamacare, which was approved in 2010. So Scott is correct that Ryan, in writing the House budget, calls for the end of Obamacare but relies on revenue estimates that include Obamacare. The Affordable Care Act takes many steps to raise revenues. The biggest ones are cutting in half the maximum amount of money employees can put in nontaxable health savings accounts, penalizing companies with more than 50 employees that don't provide health insurance and imposing an excise tax on high-premium insurance plans. If Obamacare is repealed, the CBO and Joint Committee on Taxation have estimated that revenues would decrease by $1 trillion over 10 years. Now, here's where things get fuzzy. Ryan and other House GOP leaders say they want to eliminate the Obamacare taxes. Their budget also calls for a revenue-neutral overhaul of the tax system. They want to reduce the number of individual tax brackets and cut top tax rates. They say they would pay for all these reductions by eliminating the alternative minimum tax and getting rid of many loopholes and deductions. But the Ryan budget does not name even one loophole or deduction it would axe to pay for reducing rates and make up for $1 trillion in lost Obamacare revenue. That work would be left to the House Ways and Means Committee. Cutting tax breaks would be a sensitive job. The largest breaks to individuals are not having to pay income taxes on their employers' contributions to their health care plans and pensions, and the mortgage interest deduction. Ryan has had some criticism from the right -- including the Heritage Foundation and Rep. Paul Broun, R-Ga. -- for keeping the $1 trillion that equates to Obamacare taxes in his budget. 'These tax hikes are the oxygen that fuels the fire of ever bigger spending,' the Heritage Foundation wrote.
Our ruling Scott said the House budget 'keeps the Obamacare taxes and spending cuts that paid for Obamacare, but then cuts all of the benefits.' There's no doubt the GOP plan would eliminate the Affordable Care Act. But the tax part of Scott's claim has a bit of complexity. The House budget is based on revenue projections that assume Obamacare taxes will continue. What Scott didn't say is that the plan calls for replacing the Obamacare levies with revenues that would come from reducing income tax breaks. We can't entirely fault Scott for the omission, however, because the House budget doesn't identify any tax breaks that would be pared -- it merely assigns that crucial work to a committee. So Scott's statement is accurate, but needs some clarification. We rate it Mostly True.