Republicans Outline Spending Ideas That Could Affect Nonprofits

House Republicans today unveiled a 2013 budget blueprint that steps up their efforts to slash federal spending and overhaul safety-net programs like Medicaid and food stamps and rejects President Obama’s proposal to raise taxes on the wealthy.

Instead, the plan, released by Rep. Paul Ryan, chairman of the House Budget Committee, would cut the current individual income-tax brackets from six to two—10 percent and 25 percent—and end “credits, deductions, and loopholes.”

The document, “The Path to Prosperity,” does not specify whether the charitable deduction should be among the tax breaks that are eliminated. A Budget Committee spokesman said the House Ways and Means Committee would flesh out that part of the tax proposal after holding hearings.

The GOP plan, which must be formally approved by the Budget Committee, sets guidelines for future legislation, outlining broad spending goals rather than specific cuts. But the overall approach would affect a broad spectrum of government programs that benefit nonprofits and their low-income clients.

It would cut $5-trillion from President Obama’s 2013 budget proposal, limit total spending as a percentage of the economy, and require any increased spending on “mandatory” programs like Medicaid to be offset by cuts elsewhere.

It would also increase the cost savings that would come from non-defense programs in the across-the-board spending cuts that are due to take place next January because the Congressional “super committee” failed to come up with a deficit-reduction plan. The plan renews proposals Republicans made last year to change the way the federal government pays for Medicaid and food stamps, programs it says are “growing at an unsustainable rate.” Instead of paying a fixed percentage of states’ costs, it would offer block grants, or lump sums, to states and let them determine how to spend the money. The current system creates an incentive for states to enroll more people because it increases the amount of federal aid they receive, it argues.

The White House quickly criticized the GOP blueprint, saying it would give tax cuts to the wealthiest Americans and “fails the test of balance, fairness, and shared responsibility.”

Send an e-mail to Suzanne Perry.