Factbox: Plans for deficit cuts, no consensus

WASHINGTON (Reuters) – Lawmakers agree on the need to cut record deficits and mounting national debt, but beyond that there is little consensus on how to do it.

Most Republicans want to balance budgets through deep spending cuts, while most Democrats agree spending cuts are needed but also want taxes to be part of the remedy.

President Barack Obama has spelled out his vision for reducing red ink in his 2012 budget plan. House Budget Committee Chairman Paul Ryan has laid out a dramatically different vision of a future debt-free America. In the middle is a deficit-reduction blueprint drawn by Obama’s fiscal panel led by Democrat Erskine Bowles and Republican Alan Simpson.

If lawmakers do nothing to reduce deficits, congressional budget analysts say the federal government will chalk up nearly $7 trillion in red ink over the next 10 years.

Senate Budget Committee Chairman Kent Conrad is also preparing a 2012 budget blueprint and a group of six Democratic and Republican senators are in talks to try to fashion a bipartisan deficit-reduction plan.

House Democrats are also expected to propose their own 2012 budget plans. But those plans are still being written, so here is a comparison of key points in proposals offered by Obama, Ryan and the fiscal commission.

DEFICIT REDUCTION

* Obama’s proposed budget for fiscal 2012, which begins October 1, reduces deficits by $1.1 trillion over 10 years, using spending cuts to achieve two-thirds of that goal.

* Ryan’s 2012 budget reduces deficits over the next decade by $4.4 trillion, calls for $5.8 trillion in spending cuts and also calls for lower tax rates for businesses and individuals.

* The deficit commission plan calls for reducing deficits by $4 trillion over the next decade mostly through spending cuts. The panel proposed reducing the number of tax breaks for individuals and companies to raise revenue and help reduce overall tax rates.

MEDICARE, MEDICAID, SOCIAL SECURITY

* Obama has called for shoring up the Social Security retirement program, but his budget did not contain specific proposals. He largely left Medicare and Medicaid health programs for the elderly and poor alone. Last year’s healthcare overhaul made changes in the two programs to expand Medicaid coverage and achieve cost savings in Medicare.

* Ryan’s proposal would dramatically alter Medicare and the traditional fee-for-service program would eventually be eliminated. To save the federal government money, seniors would be given federal subsidies based on income and health status to shop for health coverage from private insurers. Medicaid would become a block grant program where the federal government gives states a chunk of money to run the health program for the poor without federal interference.

Ryan’s plan includes no specifics on Social Security. He calls for bipartisan efforts to improve its finances.

* The Simpson-Bowles plan calls for more cost sharing in Medicare to discourage over-utilization of healthcare. It includes a cap on out-of-pocket expenses to protect against catastrophic costs. It also would require supplemental coverage plans to have deductibles to reduce costs through greater vigilance against fraud.

On Social Security, the commission called for gradually increasing the amount of wages, currently $106,800, taxed for this fund. The panel also called for gradually raising the age for full retirement benefits, already set to rise to 67, to 68 by 2050 and 69 by 2075.

TAXES

* Obama’s plan calls for ending a number of tax breaks for oil, gas, and coal companies to raise $46 billion over 10 years to help pay for development of “clean” energy. It would tighten international tax rules and raise money by eliminating a number of tax loopholes. It also raises tax rates on the wealthy after a two-year extension of Bush-era tax cuts that had been set to expire at the end of 2010.

* Ryan’s plan would cut the top tax corporate and personal tax rates to 25 percent, down from 35 percent. He calls for repealing Obama’s healthcare overhaul and the roughly $800 billion in tax increases contained in the law.

* The fiscal commission called for a major tax law overhaul to simplify rules and eliminate a number of so-called “tax expenditures” — tax breaks that seek to guide social and economic activity through the tax code. The proposal calls for using the money raised by reducing tax expenditures to lower income tax rates across-the-board.

DEFENSE AND OTHER DISCRETIONARY SPENDING

* Obama’s budget proposes spending $702 billion on national defense next year, including nuclear weapons and military healthcare and retirement spending, and is down from $721.3 billion spent in fiscal 2010. His budget called for a five-year freeze on non-security discretionary spending.

* Ryan’s budget reflects $178 billion in savings identified by Defense Secretary Robert Gates. Some $100 billion is reinvested in combat capabilities and the rest is used for deficit reduction. Ryan calls for bringing other spending down to 2008 levels and freezing it there for five years.

* The Bowles-Simpson plan says any serious attempt to reduce deficits must include defense, an area that lawmakers have often left off the table. It calls for freezing discretionary spending at 2011 levels and bringing it down in 2012 to pre-recession levels in 2013.

(Reporting by Donna Smith; Editing by Philip Barbara)

Factbox: Plans for deficit cuts, no consensus