President Barack Obama at the Department of the Interior. (Mar....

President Barack Obama at the Department of the Interior. (Mar. 2, 2012) Credit: Getty Images

After a few months of relative peace on the budget front, Democrats and Republicans are readying for a party-defining, election-year fight over trillion dollar-plus deficits and what to do about them.

The focus in the week ahead will be on the conservative-dominated House, where the Budget Committee chairman, Rep. Paul Ryan, R-Wis., is fashioning a sequel to last year's "Path to Prosperity" manifesto that ignited a firestorm over Medicare.

The upcoming debate gives Republicans a chance to show how they would tackle out-of-control budget deficits and rein in the cost and scope of government. Those are top issues for the conservative supporters counted on by Republicans to turn out in large numbers in the fall to maintain the GOP's control of the House.

President Barack Obama played it safe when he released his spending blueprint last month for the budget year that begins Oct. 1. It calls for tax increases on wealthier earners and modest spending curbs. But it would not address the spiraling costs of Medicare and Medicaid, the health care plan for the poor and disabled.

Last year's GOP measure proposed replacing Medicare fee-for-service payments to doctors and hospitals with a voucher-like program in which the government would subsidize purchases of health insurance on the private market.

Democrats said the subsidies would not keep up with inflation in medical costs and would shift costs to older people, and they accused Republicans of plotting to "end Medicare as we know it." The uproar was an important factor in a special election in which Democrats seized a longstanding GOP-held House seat in upstate New York. Republicans showed less enthusiasm for the plan after that.

Ryan has since come out with a less stringent version of the measure, in concert with Sen. Ron Wyden, D-Ore., that would keep the traditional Medicare "fee for service" program as an option along with private insurance plans. It features more realistic inflation increases, and less resulting savings for the government, than last year's measure.

"This coming debt crisis is the most predictable crisis we've ever had in this country," Ryan said in a video statement. "This is why we're acting. This is why we're leading. This is why we're proposing — and passing out of the House — a budget to fix this problem: So we can save our country for ourselves and our children's future."

Ryan has yet to disclose the specifics of his plan. It could come out as early as Tuesday, which would allow his committee to sign off on it by the end of the week.

Pressure from conservative lawmakers has prompted GOP leaders and Ryan to reopen last summer's budget pact and impose further cuts on domestic agencies such as the departments of Education, Energy and Housing and Urban Development.

Last year's deal with Obama set a $1.047 trillion cap on the annual operating budgets of Cabinet departments and other agencies for the upcoming 2013 budget year.

GOP aides say Republican leaders want to cut that figure by $19 billion, or almost 2 percent, leading to protests from Democrats that Republicans are going back on the deal. The move would make it more difficult to pass follow-up spending bills setting agency budgets for new fiscal year.

Tea party lawmakers on the House Budget Committee, such as Rep. Mick Mulvaney, R-S.C., have pressed for even deeper cuts, leading to a push-and-pull match with the more pragmatic Republicans on the House Appropriations Committee.

The annual budget debate is conducted under arcane rules. The main budget document, called a budget resolution, is a nonbinding measure that sets the parameters for follow-up legislation on spending and taxes. Even though its broader goals usually are not put into place, it is viewed as a statement of party principles.

Democrats controlling the Senate do not want a budget debate. Senate Majority Leader Harry Reid, D-Nev., has said he will instead rely on language he inserted in a budget pact last year that allows for floor action on the annual spending bills without a budget resolution.

By avoiding a budget debate, Reid protects several vulnerable incumbent Democrats from politically dangerous votes.

Despite the GOP proposal's sharp cuts to agency budgets and Medicaid, and its call to repeal Obama's health care law, it is certain to leave substantial annual deficits over the next decade. That's how bleak the nation's underlying financial picture is.

Democrats and independent budget expert are sure to cite the resulting deficits as proof that new tax revenues are needed as part of any comprehensive answer to the fiscal crisis.

GOP aides, who spoke on condition of anonymity to discuss party deliberations, say the measure may include special instructions to other House committees to scrub the programs under their jurisdiction for savings that could be used to forestall about $100 billion in across-the-board spending cuts set to take effect in January.

Those cuts, including $50 billion in defense spending, are punishment for the failure of last year's supercommittee to come up with a new package of $1.2 trillion in deficit cuts over the next decade as part of the deal to let the government keep borrowing.

The GOP plan would bundle the new cuts from various committees and try to pass them as early as this spring. They might include various proposals discussed by the supercommittee and earlier spending cuts that the House considered as a way to pay for a Social Security tax cut without adding to the government's long-term debt.

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