GOP hopeful Kasich to detail budget plan

Posted at 9:49 AM, Oct 15, 2015

PLYMOUTH, N.H. (AP) -- Republican presidential candidate John Kasich vows to balance the federal budget within eight years as part of a domestic agenda he will unveil Thursday.

The Ohio governor's budget framework prescribes tax cuts focused on businesses and the wealthy, a major boost in military spending and the end of the federal government's role in administering education and transportation funding. Kasich's tax plan also includes a benefit for lower income people.

It's an agenda for the first 100 days that is not as aggressive of some of his rivals for the GOP nomination, but one he predicts will prompt criticism from opponents in both parties.

"People are going to go nuts yelling about those programs. ... I don't care," Kasich told The Associated Press aboard his campaign bus Wednesday. "The country is really ready for dramatic change, and we're going to deliver it to them."

The policy rollout, to be detailed in a morning speech at a New Hampshire community college, comes as Kasich fights to stand out in the packed Republican presidential field.

In an election season celebrating political outsiders, the 63-year-old Republican has a resume that includes 18 years in Congress and two terms as governor in one of the nation's key swing states.

Yet his blunt style resonates with some voters, particularly in New Hampshire, the unofficial staging ground for his campaign.

"It's all going to be a tough sell, but he knows the budget better than anyone," said former Texas Rep. Dick Armey, who served as House Republican leader while Kasich led the House budget committee two decades ago. Armey was among several Republicans briefed on the proposal.

Kasich is calling for broad tax cuts that would grow the budget deficit in the first few years, according to projections his campaign shared with AP. His advisers predict that economic growth sparked by the tax cuts, backed by cuts to Medicare and Medicaid and an eight-year freeze on all non-defense discretionary spending, would eventually offset lost tax revenue to balance the federal budget for the first time since Bill Clinton was president.

Kasich's tax plan would lower the top individual tax rate from 39.6 percent to 28 percent, reduce long-term capital gains tax rates to 15 percent and eliminate the estate tax, lower the top business tax rates from 35 percent to 25 percent and double the research and development tax credit for small businesses.

While most of the cuts would benefit the wealthy, Kasich also would increases by 10 percent the earned income tax credit, a measure designed to help lower-income taxpayers.

"If you are a person that thinks you ought to pound the rich into submission, I guess you won't like the plan," Kasich said.

At the same time, the Republican governor wants to dramatically reduce the federal government's role in education, transportation, job training and Medicaid. He would package the federal dollars now dedicated to those programs into massive block grants for state leaders to manage locally.

Such a plan has risks. Democrats have successfully attacked Republican policies for favoring the rich and have criticized past GOP proposals to convert federal programs to block grants and eliminate cabinet agencies.

Kasich's plan also ignores two major federal programs: President Obama's health care law and Social Security. He said he'll outline separate proposals on those later.

He does, however, propose a series of cuts to Medicare that would slow the growth rate of the government-subsidized health care program for more than 50 million elderly and disabled Americans.

One of the only spending increases in the plan goes to the nation's military. Kasich wants to boost military spending by $102 billion, or 17 percent, between 2017 and 2025.

The plan is cause for optimism among some who questioned Kasich's commitment to fiscal conservatism after he expanded Medicaid eligibility in Ohio as part of the federal health care overhaul, said Grover Norquist, the president of Americans for Tax Reform and a former Kasich critic.

Norquist called it "a grown up approach" on spending and "significantly pro-growth" on taxes. He also said Kasich's policies were more practical than some plans that call for blowing up the existing tax system.

"Everything on his plate is doable, is achievable," Norquist said.