Budget hawk: A closer look at the Ryan plan

Mitt Romney's budget hawk running mate Paul Ryan made his name in Congress by releasing a bold, government-slashing budget proposal that he calls 'The Path to Prosperity." Democrats have criticized Ryan's budget as a "Darwinian" re-making of the federal government, which would reward the rich and corporations with lower tax rates while cutting safety-net programs like Medicaid by hundreds of billions of dollars. But Ryan and his defenders say he is one of the few people in Washington willing to state the obvious yet politically risky fact that the nation's entitlement programs aren't sustainable and need major changes to survive.

President Barack Obama's campaign released a statement Saturday saying Ryan's plan "would end Medicare as we know it by turning it into a voucher system, shifting thousands of dollars in health-care costs to seniors." The attack shows Democrats will use Ryan's budget proposals as a weapon against Romney. But will it work on voters?

Below, we've laid out the five key points from Ryan's "Pathway to Prosperity" budget so that you can judge for yourself.

1. Ryan's budget plan cuts $5.8 trillion over 10 years from projected federal spending and reduces the deficit by $4.4 trillion over the same period. Discretionary spending, which includes programs like food stamps, would see more than $900 trillion in reductions. The budget also calls for the repeal of President Obama's health care reform law, which the plan says would save billions in federal subsidies that will be given to lower-income people to buy insurance.

2. The most contentious part of Ryan's proposed budget is what he would do to change Medicare, the nation's insurance plan for retirees and a political third rail. Ryan's plan would eventually transform Medicare into defined payments that seniors can use to buy private insurance or a government plan on an insurance exchange. There would be no limits to the out-of-pocket costs seniors could have to pay in this program, but Ryan assumes that the increased competition between Medicare and private plans would bring down overall costs. The amount of money seniors get to buy their insurance can only grow at a slightly higher rate than GDP each year. (The Congressional Budget Office says this would save the government money, but also significantly increase the amount seniors will eventually have to pay for their own insurance.) The eligibility age would gradually rise to 67, from 65. Democrats say this transforms Medicare into a "voucher program" that may leave seniors with big prescription bills and other medical costs, and the Obama campaign is already using this proposal against Romney and Ryan. If Obama can convince seniors--a powerful voting bloc that turns out at the polls--that Ryan would worsen or weaken Medicare, it could mean bad news for their campaign.

3. Ryan would cut the top federal income tax rate for individuals and corporations to 25 percent from 35 percent. The budget says some tax breaks and loopholes would be eliminated to help offset the revenue loss from that move.

4. Ryan would slash Medicaid, the insurance program for some low-income people, by $735 billion over ten years, and hand the program back to the states to administer with more freedom. The CBO writes that states would most likely have to "reduce payments to providers, curtail eligibility for Medicaid, provide less extensive coverage to beneficiaries, or pay more themselves than would be the case under current law."

5. The budget spares Social Security and defense spending, which are left at current levels. Ryan's decision to back off Social Security is interesting, since he put forward proposals to privatize the program around the same time that President George W. Bush tried to sell the nation on a similar proposal. (Social Security does not face the same solvency challenges as Medicare and Medicaid, and is not projected to grow much as a percentage of GDP over the next 20 years.)

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