(Bloomberg) — Senate Republicans unveiled a spending plan Wednesday that sets up a confrontation between their party's defense and budget hawks and omits a politically polarizing Medicare overhaul championed by Rep. Paul Ryan.
The first Senate budget proposal authored by Republicans since 2006 calls for $430 billion in unspecified savings from Medicare, the health care program for seniors, as part of a plan to trim $5.1 trillion in spending and balance the budget in 10 years without raising taxes. It doesn't include partially privatizing Medicare as does the House plan put forth Tuesday.
See also: House Republicans seek Medicare cuts
Another difference that will make it difficult to reconcile the two chambers' budget plans is that the Senate proposal contains $58 billion in war funding, which President Barack Obama requested for next year, in contrast to the $94 billion House Republicans want.
Instead, the Senate budget plan contains a reserve fund placeholder that allows for a deal later in the year to increase defense spending if offsets can be found.
The House plan uses an accounting maneuver to exceed Pentagon spending limits set by a 2011 bipartisan budget agreement. Tea Party-aligned lawmakers will fight to keep those caps in place while those advocating for more defense spending such as Sen. John McCain of Arizona say they'll oppose any plan that maintains the limits.
Islamic State
The rise of the Islamic State and terrorism concerns have led more lawmakers from both parties to back increased Pentagon spending. Yet doing so would unravel budget cuts the Republican Party considers its biggest legislative accomplishment unless Congress can find other budget cuts to make.
Democrats in the Senate will block attempts to find savings from entitlement programs or domestic agencies. With the federal budget deficit easing and entitlement cuts unpopular with voters, a number of Senate Republicans also worry that scaling back entitlements would damage them politically in 2016.
The bulk of the Senate plan's savings, totaling $4.2 trillion, come from cuts to entitlement programs.
"Let's face it, these solutions will not be popular," Sen. Ron Johnson, a Wisconsin Republican whose seat is up in 2016, said regarding cuts to entitlement programs. "President Obama is not even close to being on board."
That leaves no clear path to avoiding $35 billion in Pentagon cuts set to take effect beginning Oct. 1.
Unraveling PPACA
The budget blueprint also makes clear that Republicans plan to try to unravel the Patient Protection and Affordable Care Act (PPACA) — Obamacare — if the Supreme Court rules against its health insurance subsidies in most states later this year.
Both the House and Senate proposals assume $2 trillion in savings from a full repeal of PPACA — a measure the president has said he would veto. The Senate plan keeps the $1 trillion in tax increases from PPACA under the assumption Congress will find a way to replace the lost revenue.
Both plans make deep cuts to Medicaid and food stamps. The Senate budget would save $400 billion by creating block grants for Medicaid and combining that with the Children's Health Insurance Program (CHIP). Another $600 billion in savings would come from creation of a trust fund for states to manage the programs.
Yet such cuts aren't enough to bring the budget into balance over 10 years. Groups that advocate fiscal restraint accused the House plan of pursuing a number of "gimmicks" in order to achieve their goal.
