Heritage Foundation releases its own budget proposal

The conservative Heritage Foundation released its own plan to restore America’s fiscal future Tuesday. Titled “Saving the American Dream,” the plan is the latest conservative proposal on how to reduce spending and solve the debt crisis.

The proposal tackles entitlement reform and goes a step further than even House Budget Chairman Paul Ryan’s “Path to Prosperity” in many areas. It balances the federal budget within ten years with spending at no more than 18.5 percent of GDP, restructures the tax code and reduces the debt to 30 percent of GDP within 25 years.

When it comes to Social Security, “Saving the American Dream” doesn’t do away with entitlement program, but it does propose several significant changes. For starters, instead of being an income replacement system, recipients — those who have worked over 35 years — would receive a flat payment designed to keep them out of poverty.

Payments would also be adjusted to income. Senior citizens with incomes from other sources would get a smaller check, for example, while affluent retirees would not receive a check at all. According to the foundation’s Center for Data Analysis (CDA), the Social Security reforms will save $10.9 trillion by 2035.

Ryan’s plan, in contrast, doesn’t put forth a concrete plan to address Social Security reform.

The proposal also seeks to transform Medicare into a program more like the Federal Employees Health Benefits Program (FEHBP), where seniors enroll in the plan of their choice and then receive defined contributions.

Heritage also sets forth a sustainable, long-term budget plan for Medicare to ensure its stability for future retirees. The CDA projects the Medicare reforms will save $2.3 trillion by 2021.

On health care, the Heritage proposal starts by repealing the health care reform bill President Obama signed into law. In its place would be a non-refundable tax credit to help families purchase health plans. Employers and employees can also decide whether to continue with employer-purchased health plans, or cash out the coverage in exchange for a higher income.

Other major spending reforms in Heritage’s plan include returning non-defense discretionary spending back to 2008 levels, scaling back education spending, replacing farm subsidies with farm savings accounts and privatizing government-supported transportation.