The Republicans, led by House Budget Committee Chairman Paul Ryan, aim to shave $4.6 trillion off of the federal government’s spending trajectory. They get there primarily by reducing the growth rate of domestic social programs like Medicaid and rolling back the coverage-expanding provisions of the Affordable Care Act. Although the Ryan budget accepts the revenue increases that were part of the fiscal cliff deal and the Affordable Care Act, it does not allow for any further revenue increases.
The Democrats, led by Senate Budget Committee Chairwoman Patty Murray, aim to reduce spending by $975 billion. Yet they also call for $100 billion in new stimulus spending and shutting off the $1.2 trillion in automatic spending cuts scheduled to take place under sequestration, which suggests that spending reductions will be more than balanced by spending increases. And while the Ryan budget resists revenue increases, the Murray budget calls for $975 billion in revenue from unspecified cuts to loopholes and spending in the tax code.
Beneath the surface of these two budgets lie coalition politics. The Ryan budget, for example, delays its major Medicare reforms until today’s 55-year-olds reach retirement age. It also leaves Social Security largely untouched. One way to look at this is as a concession to the political reality that older Americans tend to support Republicans, and so reforms that reduce benefits for older Americans will be met with strong intra-party resistance. At the same time, the main beneficiaries of Medicaid expansion are low-income adults who are not, as a rule, inside the GOP tent. Conservatives generally believe that smaller government is better for everyone, including the poor. Yet conservative politicians have more to fear from voters who rely on Social Security and Medicare than from voters who rely on Medicaid, which explains their reluctance to make deep cuts in old-age social programs and their willingness to make cuts in programs that tend to benefit the young.
The Murray budget, in contrast, tries to unite a very different coalition. Democrats represent low-income adults who rely on programs like Medicaid; unionized public employees and health-sector workers who rely on federal spending to make a living; students and educators who count on higher education subsidies; and college-educated professionals who favor tax increases on people richer than themselves. This unwieldy coalition makes it very difficult to cut spending. There is a strong intellectual case that Democrats should embrace a single-payer system like Canada’s to shrink health costs, thus allowing the federal government to spend more on, say, green energy investments. But for every left-of-center Democrat who likes the idea, there is a Democrat who represents hospitals and insurers who does not. And though Democrats are far more open to tax increases than Republicans, they have backed themselves into a position in which they can only raise taxes on, at best, the top 2 percent of earners.