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Ryan says budget deal possible as he readies his own plan

U.S. Rep. Paul Ryan (R-WI) arrives for the Barack Obama second presidential inauguration on the West Front of the U.S. Capitol January 21, 2
U.S. Rep. Paul Ryan (R-WI) arrives for the Barack Obama second presidential inauguration on the West Front of the U.S. Capitol January 21, 2

By Andy Sullivan

WASHINGTON (Reuters) - The Republicans' point person on fiscal issues in Congress said on Sunday that compromise with President Barack Obama is possible on taxes and spending even though his soon-to-be-unveiled budget plan faces certain rejection from Obama's Democrats.

Representative Paul Ryan, the chairman of the House of Representatives Budget Committee, acknowledged that Democrats who control the Senate are likely to defeat his proposal to repeal Obama's signature healthcare law and other elements of his plan to balance the budget within 10 years.

But Ryan, whose ideas on taxes and spending gained national prominence when he was selected as the Republican vice-presidential candidate last year, said Democrats and Republicans might be able to agree on less dramatic steps that would narrow budget deficits in coming years.

"There are things that we can do that don't offend either party's philosophy, that doesn't require someone to surrender their principles, that make a good down payment on getting this debt and deficit under control," Ryan said on "Fox News Sunday."

Ryan had lunch with Obama last week as part of an effort by the president to reach out to Republican lawmakers to resolve a fiscal standoff that has slowed economic growth and generated repeated crises over the past two years.

"This is first time I've ever had a conversation with the president lasting more than, say two minutes, or a televised exchange," Ryan said of their meeting.

"We exchanged very different frank and candid views of one another that were very different. But at least we had this conversation," he said.

Ryan's budget blueprint, due to be unveiled on Tuesday, will open the next front in Washington's fiscal battle over how to tame the growth of the $16.7 trillion federal debt.

It would cut spending by $5 trillion and partially privatize the Medicare health plan for retirees in order to balance the budget in 10 years, he said.

Though the plan is likely to win approval in the Republican-controlled House, it faces steep odds in the Democratic-controlled Senate, where Senator Patty Murray is preparing a blueprint that is expected to reduce breaks for wealthy taxpayers and keep safety-net spending largely unchanged.

SIMILAR CUTS, DIFFERENT RESULTS

Ryan's plan to balance the budget in 10 years is a dramatic change from last year's plan, which also envisioned $5 trillion in cuts but would not have balanced the budget until 2040.

Ryan's budget-balancing efforts are helped by the $620 billion in tax increases on the wealthy that Obama won in a January 1 deal to avert the "fiscal cliff."

But further tax increases are out of the question, he said.

"We already had a tax increase. We think it's unfair to ask hardworking taxpayers to pay more so Washington can spend more," he said.

Both Republicans and Democrats want to simplify the tax code to reduce the tax breaks and loopholes that have proliferated since the last comprehensive rewrite in 1986.

But they have contrasting goals: Republicans want to use those savings to lower rates, which they say would boost economic growth. Obama and other Democrats want to put that money towards deficit reduction.

Ryan's budget plan also rests on several other approaches that Democrats have rejected in the past.

It would impose deep cuts on food assistance for the poor and dramatically scale back federal contributions to the Medicaid health program for the poor. It would give retirees an option to stay in the current Medicare health program or use a subsidy to purchase private coverage, an approach that Democrats say would weaken the existing program and force seniors to shoulder more of their own health costs.

Obama is not likely to back those ideas this time around, either, Ryan acknowledged.

"My guess is he won't," Ryan said. "But are there some things we can do short of that that gets you closer to balancing the budget, that delays a debt crisis from hitting this country? Yes, I think there are."

After four straight years of deficits over $1 trillion, the nonpartisan Congressional Budget Office projects that the fiscal 2013 gap will fall to $845 billion. As the economy improves, deficits will narrow to around $430 billion by 2015, CBO said, but they are projected to rise after that, nearing $1 trillion again by 2023 as the massive "baby boom" generation ages and draws more retirement and health benefits.

(Editing by Eric Walsh)

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