Budget Overview & Highlights

The Saving the American Dream budget empowers individuals to define their own financial future, creates a better delivery system for safety net services, reduces spending across the federal government, and adequately protects America’s national security.

Features

• Modeled on Heritage Foundation’s Saving the American Dream Plan
• Easy as “1-2-3”
  • 1 unified tax rate
  • 2 credits (health insurance and Earned Income Tax Credit)
  • 3 deductions (mortgage interest, higher education, charitable giving)
  • Built upon the principles of individual freedom and consumer choice, not government mandates and market distortion
  • Balances the federal budget in 2017 and stays balanced thereafter
  • Reduces publicly held debt to approximately 52% of GDP over the next decade and reduces it to 30% in the 25 years
  • Reduces spending to 17.8% of GDP by 2022
  • Includes entitlement reform for Medicare and Social Security

Tax Reform

The Saving the American Dream budget replaces today’s complex tax system with a new, simple structure that creates powerful incentives for individuals to save, invest, and build wealth.

How it works

• Single, unified flat income-based tax on consumption for both businesses and individuals (target rate of 25%)
• Individuals can save and/or invest tax free
• Eliminates 15.3% payroll tax
• Eliminates special interest loopholes
• Eliminates death and excise taxes
• Transitions to a territorial tax system
• Caps receipts at 18.5% of GDP
• Replaces archaic and complex depreciation schedule with expensing

What it does

• Makes paying taxes easier, more transparent and predictable
• Frees Americans to base personal financial decisions on individual choice
• Promotes personal savings and wealth creation for all income levels
• Encourages self-reliance and lessens dependency on government programs like Social Security

Entitlement Reform

Social Security

The new reform creates a retirement security system more akin to a traditional insurance plan than the current  “income replacement” plan

How it works

• Delivers an income-adjusted monthly benefit for retirees
• Gradually increases retirement age
  • Over the next 10 years normal retirement age will rise to 68 for workers born in or after 1959
  • Over the next 18 years early retirement age rises to 65 for workers born in or after 1964
  • After that, retirement ages will be indexed to longevity, adding about one month every two years according to current projections
• Implements means testing to phase out benefits for married couples earning greater than $110,000 in non-Social Security Income
  • Only the wealthy will see a decrease in monthly benefit
• Indexes COLA to Chained CPI

What it does

• Saves Social Security
• Provides economic security for seniors, preventing sudden poverty as a result of unforeseen events
• Creates new incentives for individuals to save for retirement
• Eliminates payments to wealthy individuals
• Protects retirees who truly need help

Medicare

The new reform creates a market-driven health care system that empowers seniors to choose their own health care insurance based on personal needs and individual preferences

How it works

• Transitions to a defined contribution premium support plan
• Frees Medicare participants to choose to remain in the existing Fee For Service plan or transition to new premium-support program
• Government contribution will be based on weighted average premium of regional bids of competing health plans
• Caps total Medicare spending at CPI plus 1 percent and Medicare population growth.
• Enacts a permanent “Doc Fix” and physician payments are adjusted for inflation measured by CPI

What it does

• Ensures seniors at all income levels can afford health insurance
• Reduces the financial burden on future taxpayers 
• Eliminates payments to wealthy individuals
• Protects seniors who truly need help
• Reduces government involvement in personal health care decisions

Health Insurance & Medicaid

The Saving the American Dream budget creates a new portable health insurance credit that ensures all Americans can afford health care

How it works

• Repeals ObamaCare
• Replaces it with a new market-based income-adjusted tax credit for purchasing health insurance of the one’s choice
• Very low-income individuals and families receive additional assistance through a larger tax credit
• Low-income disabled and elderly are covered by Medicaid; funding is blocked granted to the states, capped at 2007 levels, and indexed to medical inflation thereafter
• States are given more freedom to design their own Medicaid programs

What it does

• Frees individuals to make their own health care choices
• Eliminates government takeover of health care
• Reduces financial burden on future taxpayers
• Preserves the Medicaid safety-net program for the truly needy

Other Spending Reform

The Saving the American Dream budget makes significant spending reforms to programs across the federal government to reduce the size of government, eliminate waste, lower future burdens on taxpayers, encourage productive economic activity, and enhance individual liberty and choice.

• Cuts a total of $9.6 trillion over ten years versus the President’s budget, cuts $7.1 trillion versus the CBO baseline
• Cuts the size of government in half over 25 years

Defense

The Saving the American Dream budget protects America’s security interests at home and abroad and keeps its promise to America’s heroes

• Ensures adequate funding to protect America’s national defense
• Strengthens and modernizes our military force
• Assumes full withdrawal from Iraq and Afghanistan by 2015

Regulations

The Saving the American Dream budget reforms the regulation process to transform a costly, burdensome, and often unconstitutional process that stifles economic growth

• Adopts REINS Act
• Eliminates Davis-Bacon wage provisions
• Sunsets regulations