This past Thursday, the U.S. House of Representatives approved a $3.5 trillion budget plan by a vote of 228 to 191. The budget plan, initially proposed by House Budget Committee Chairman Paul Ryan (R-Wisc.), stands in strong contrast to the Simpson-Bowles proposal which was rejected earlier in the week by a large majority; only 38 members voted for it.
The Ryan plan aims to cut tax rates and calls for drastic changes in Medicare in an attempt to curb costs for future retirees. However, the proposal will likely be rejected by the Democrat-controlled Senate. It will undoubtedly frame each of the parties’ postitions on fiscal issues – an area that will play a key role in the presidential and congressional elections in November. Immediately following the vote, both Republicans and Democrats responded with an arsenal of press releases either showing their contempt or praise for the proposal's passage.
White House Press Secretary Jay Carney stated that the Ryan plan would create “a segmented replacement for Medicare that would burden seniors and end the program as we know it.” House Speaker John Boehner (R-Ohio) said the plan “sets a course that’s sustainable for our generation as well as the generations to come.” Based on comments and actions after the vote, it is clear that a bipartisan agreement on the budget is becoming less and less of a reality. Moreover, the fate of the Simpson-Bowles model exposes the deep divide in Washington, which is telling as the original plan was bipartisan in nature.
The budget will continue to be the major issue that both parties will attempt to tackle in 2012 and it will likely play a major role in the upcoming elections. Most political analysts believe that Congress will remain split throughout 2012 and observers feel that any proposal that is not bipartisan in nature will simply be rejected. Although members of Congress know that their proposals regarding the budget may not pass, they will likely continue to present them to better frame their political agendas.
Prepared April 3, 2012 by Vincent Calvo (email@example.com), legislative aide, Government Affairs, Financial Executives International (FEI). This summary does not represent FEI opinion specifically noted above.