House Passes Plan to Avert Shutdown of Government

House Passes Plan to Avert Shutdown of Government

By Published: March 21, 2013

WASHINGTON — The House gave final approval Thursday to legislation to keep the government financed through September, and it also passed a Republican blueprint that enshrined the party’s vision of a balanced budget that would substantially shrink the government, privatize Medicare and rewrite the tax code to make it simpler and flatter.

With a final flurry, Republican leaders sent the House home before noon Thursday for a two-week recess, confident that they had outmaneuvered President Obama and the Democrats in the running fiscal fight from the last redoubt of Republican control in Washington. Speaker John A. Boehner, Republican of Ohio, was already looking toward the next showdown, this summer, when the government’s statutory borrowing limit must be raised, to extract more concessions.

“Dollar for dollar is the plan,” Mr. Boehner said, reviving a rule, breached in January, that holds that any increase in the debt ceiling must be accompanied by equivalent spending cuts.

The financing plan for the rest of the fiscal year, which passed by a vote of 318 to 109, averts the possibility of a government shutdown on Wednesday, when the current stopgap spending law expires. But it does more. It locks in across-the-board spending cuts that will usher in the most austere government outlook in decades. It underfinances key elements of the president’s health care law, as the administration builds up purchasing exchanges for health insurance. And it makes permanent four formerly temporary gun rights provisions, just as Senate Democrats prepare a final push on gun control legislation.

Four months after Mr. Obama was re-elected, the separate House budget plan — the third drafted by Representative Paul D. Ryan of Wisconsin, the House Budget Committee chairman and former vice-presidential nominee — affirms the blueprint for governance that the president ran against.

It would convert Medicare into a system of private insurance plans financed by federal vouchers and roll back many of Mr. Obama’s signature legislative accomplishments. It would repeal the health care overhaul of 2009, eliminating the subsidized insurance exchanges and the Medicaid expansion that make up the core of the law. It would also undo the Wall Street regulatory law passed after the 2008 financial crisis, and cut spending by $4.6 trillion through 2023, the year the plan purports to bring the budget into balance. It passed 221 to 207, with all Democrats and 10 Republicans voting “no.”

That balance, however, rests on some significant assumptions. To make spending align with revenues, the plan assumes that the amount of money raised from taxes will stay at current levels, even as it repeals the tax increases in the president’s health care law and eliminates the alternative minimum tax. The plan directs the tax writers on the House Ways and Means Committee to overhaul the tax code, leaving only two brackets, 25 percent and 10 percent, as well as a 25 percent corporate tax rate, down from 35 percent.

But the budget does not detail the tax deductions, credits and loopholes that would need to be eliminated or cut back to finance such deep tax rate reductions, effectively leaving tax writers a $6 trillion hole to fill — a task that Democrats say is mathematically impossible without raising the tax burden of the middle class.

As a political document, the budget makes an uncompromising statement after the Republicans’ electoral losses. Mr. Ryan said his budget and the Democratic version likely to pass the Senate by Saturday “clarifies the divide between us.”

“We want to balance the budget. They don’t,” he said on Thursday. “We want to restrain spending. They want to spend more.”

“We offer modernization, reform, growth and opportunity,” he continued. “They want to cling to the status quo, more taxing, more spending, more borrowing.”

Representative Chris Van Hollen of Maryland, the ranking Democrat on the Budget Committee, called the document “an uncompromising, ideological approach to our budget issues.”

“We’ve just been through a major national campaign where both candidates, Mitt Romney and Barack Obama, agreed on one thing: the people of this country faced a fundamental choice in the direction we were going to take,” Mr. Van Hollen said. “The American people voted, and they resoundingly rejected the direction this budget has taken for the third year in a row.”

Still, the passage of the spending bill and the House budget could begin an orderly process toward a bipartisan deficit reduction deal. With a week to spare, Congress averted a government shutdown, a small victory after nearly three years of lurching from budget deadline to budget deadline.

Once the Senate blueprint is passed, lawmakers will return from their spring recess in April and try to resolve the vastly different visions of taxing and spending that the House and Senate will have enacted.

If they can, committees in the two chambers will go to work on the legislation needed to turn those broad blueprints into legislative reality. If they cannot, the House and the Senate may slide back toward more budget brinkmanship. And the speaker himself suggested that agreement might be impossible.

“The president has been clear that he’s not going to address our entitlement crisis unless we’re willing to raise taxes,” Mr. Boehner said. “I think the tax issue has been resolved. So at this point, I don’t know how we’re going to go forward.”

Some rank-and-file Republicans have suggested that the House raise the debt ceiling only in exchange for significant changes to entitlement programs like Medicare and Social Security.

Representative Nancy Pelosi of California, the House minority leader, said that would never happen.

“Them’s fighting words,” she said.

This article has been revised to reflect the following correction:

Correction: March 21, 2013

 

An earlier version of this article misidentified the current top corporate tax rate. It is 35 percent, not 25 percent.

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