• BREAKING NEWS ABC shows live and on-demand -- Download the WATCH ABC app!

House passes $6T spending cut plan for 2012

April 15, 2011 12:00:00 AM PDT
President Barack Obama is set to sign a budget on Friday that will keep the government running through September. The budget cuts $38.5 billion in spending, but the budget battle is far from over.

The House passed a 2012 budget proposal from Wisconsin Republican Paul Ryan. The blueprint would impose significant changes to Medicare and Medicaid and would cut the deficit by about $6 trillion over 10 years.

The GOP proposal passed 235-193, with every Democrat voting against the measure.

Obama's budget that he offered in February relies on stiff cuts to domestic agency accounts, food stamps and the Medicaid health care program for the poor and disabled.

Under Ryan's plan, the government directly pays medical bills into a voucher-like system that subsidizes purchases of private insurance plans. People 55 and over would remain in the current system, but younger workers would receive subsidies that would steadily lose value over time.

Virtually every budget expert in Washington agrees that the projected Medicare cost increases are unsustainable, but the GOP initiative - attacked by Democrats as ending Medicare's guarantee as we know it - has launched a major-league Washington mess.

Also Friday, the House easily defeated two liberal budget alternatives. A plan offered by the conservative Republican Policy Committee failed as well, while a Democratic alternative that called for higher taxes on the wealthy and special interests fell on a 259-166 vote.

The GOP plan isn't actual legislation. Instead, the measure sketches out a nonbinding vision each year for running the government.

The resolution doesn't require the president's signature, but it does set the framework for changes to spending or tax policy in follow-up legislation.

The Democratic-controlled Senate has yet to produce its alternative plan. Senate Budget Committee Chairman Kent Conrad, D-N.D., and other members of Obama's independent fiscal commission are pursuing a bipartisan "grand bargain" blending big spending curbs with new revenues flowing from a simplified tax code.

The budget deficit is projected at an enormous $1.6 trillion this year, but more ominously, current projections show an even worse mismatch as the baby boom generation retires and Medicare costs consume an ever-growing share of the budget.

The Associated Press contributed to this report.