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Cut spending by $6 trillion over the next decade. Lower the highest tax rate to 25%. Radically overhaul Medicare and Medicaid.

Paul Ryan is not messing around.

On Tuesday, the fiscal guru of the House GOP majority released his 2012 budget proposal — the first real indication of how House Republicans want to tackle the country’s long-term budget shortfalls.

Called "The Path to Prosperity," Ryan’s budget resolution is as much a political treatise as it is a fiscal blueprint.

"[This resolution] disavows the relentless government spending, taxing, and borrowing that are leading America, right at this moment, toward a debt-fueled economic crisis and the demise of America’s exceptional promise," the resolution reads.

Ryan put it more bluntly in a press conference. "This isn’t a budget. This is a cause."

In the near term the plan calls for $3.5 trillion in federal spending next year. That’s below the $3.7 trillion that President Obama requested, but on par with nominal federal spending in 2010.

It also estimates that $2.5 trillion in revenue will be raised, leaving a deficit of just under $1 trillion.

But over the course of the next decade and beyond, the House GOP resolution aims to reduce spending, taxes and debt.

Reducing deficits: Relative to accrued debt under the president’s 2012 budget request, the measure would reduce the debt by $4.4 trillion over 10 years, Ryan estimates. Relative to the more stringent CBO policy assumptions, it cuts the debt by roughly $1.7 trillion.

Nevertheless, the House GOP plan would still add $5.1 trillion to accrued deficits over the decade.

The House Budget Committee, however, estimates its plan would achieve balance — where revenue matches outlays — by the late 2030s.

Budget resolutions, it should be noted, are initial frameworks for a months-long budget process and are not subject to an official analysis or score by the by the nonpartisan Congressional Budget Office.

CBO often comes up with different cost-and-savings estimates than lawmakers because it measures the numbers off of a different base. For instance, the CBO counts tax cuts that are not "paid for" as adding to deficits, where the House GOP and to some extent Obama did not.

Reforming the tax code: The House GOP plan would reform the tax code without raising more money than the current system. It would reduce the number of income tax brackets, lower the top rate for individuals and corporations to 25% and eliminate many tax breaks.

The aim is to keep federal tax revenues between 18% and 19% of GDP — or near its 40-year average of 18.3%.

The president’s bipartisan fiscal commission and another highly regarded bipartisan commissions of outside experts also called for tax reform that would lower rates. But unlike the House GOP, their proposals raised more revenue than the current system and a portion of that added revenue is earmarked to reduce U.S. deficits.

Until tax reform is enacted, Ryan’s plan calls for the Bush-Obama tax cuts to remain in place for all taxpayers after 2012.

Putting the reins on spending: Ryan’s plan would reduce federal spending to below 20% of the economy by 2015. That would be below the 20.7% average over the past 40 years.

And it would slice non-security discretionary spending to below 2008 levels. Ryan said that goal would be achieved in numerous ways. Among them: reforming farm subsidies, shrinking the federal work force and targeting inefficiencies at the Pentagon.

Plus, the GOP plan would introduce "enforceable" caps on spending.

All told, the House Budget Committee estimates its plan would reduce spending over the next decade by roughly $6 trillion relative to both the president’s 2012 budget proposal and the CBO’s more stringent policy assumptions over the next decade.

Reforming Medicare and Medicaid: The House GOP proposes to make major structural changes to Medicare and Medicaid.

Spending on entitlements is one of the biggest drivers of the country’s future debt.

Starting in 2022, the House GOP resolution would convert Medicare — the health care program for seniors — into a voucher program, or what Ryan calls a "premium-support model."

Under such a system, seniors would choose from a Medicare-approved list of private insurance plans and the cost of their chosen plan would be subsidized in part by the federal government.

Wealthier seniors would receive less of a subsidy than everyone else.

"The open-ended, blank-check nature of the Medicare subsidy threatens the solvency of this critical program and creates inexcusable levels of waste," Ryan wrote Tuesday in a Wall Street Journal op-ed. "But because government should not force people to reorganize their lives, its reforms will not affect those in or near retirement in any way."

Critics of similar proposals contend, among other things, that they effectively privatize Medicare and may mean seniors no longer will be guaranteed a certain set of benefits as they are under the current fee-for-service system.

Under the House GOP proposal, Medicare would offer more assistance to lower income seniors for their out-of-pocket costs and would increase payments for those who are sick if their condition worsens. The eligibility requirements for such increasd assistance, however, were not clear.

The resolution would also convert the federal government’s payments for Medicaid — the health program for the poor and disabled — into a block grant to be allocated among states. Currently, federal payments to states are determined by a formula.

Putting kibosh on health reform: The resolution assumes the repeal and defunding of the 2010 health reform law, which both created new federal subsidies to help low- and moderate-income Americans buy insurance, expanded Medicaid and also instituted a large number measures aimed at creating cost-and-efficiency savings in the health care system.

For instance, the House GOP plan assumes the tax increases under the new health law — which the budget committee puts at $800 billion — are eliminated.

The fight ahead: Ryan’s budget proposal is expected to generate a full-throated debate about the nation’s long-term debt crisis — the solutions for which bitterly divide Democrats and Republicans.

At the same time, Congress has been unable to agree to a budget for the current fiscal year, which began six months ago.

For their part, House Republicans are still divided over the magnitude of spending cuts for this fiscal year. Some lawmakers are pointing to the 2012 budget as the place where Republicans can offer the kinds of major spending cuts and reforms that the newest and most conservative members are miffed they are not getting in the 2011 fight. 

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Police have arrested nine people, including two of Britain’s wealthiest entrepreneurs, on suspicion of fraud in connection with the 2008 collapse of Iceland’s Kaupthing bank during the global financial crisis.

Britain’s Serious Fraud Office said seven men aged between 42 and 54 were held in raids on two businesses and eight homes in London. The properties were being searched and the suspects questioned at police stations in the city. Two men, aged 42 and 43, were arrested in the Icelandic capital, Reykjavik.

Entrepreneurs Robert and Vincent Tchenguiz confirmed they were among those arrested in London and said they were “cooperating fully” with authorities.

A police van was parked outside the office of the brothers’ investment firm, Rotch Property, in the upmarket Mayfair area.

The Tchenguiz brothers amassed a large property portfolio and had investments in some of Britain’s best-known retail brands, including grocer J. Sainsbury PLC and pub chain Mitchells & Butlers.

But the business borrowed more than 1 billion pounds ($1.62 billion) from Kaupthing, and was plunged into crisis when the bank collapsed.

Icelandic media said former Kaupthing chairman Sigurdur Einarsson was also arrested in London.

Britain’s fraud office is investigating whether Kaupthing made false claims while trying to attract British investors to its “high yield” deposit account, Kaupthing Edge.

It is also looking at why “substantial value” was taken out of the bank shortly before it collapsed.

Iceland’s economy imploded when Kaupthing and the other major banks collapsed under the weight of huge debt in the early days of the world financial crisis.

Prosecutors have already made several arrests in Iceland as they investigate suspected market manipulation and fraud in the run-up to the banking crash.

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The recently agreed tax cuts in the U.S. will help Europe’s economic recovery pick up some steam this year despite rising energy costs and debt troubles in a number of countries that use the euro, the EU’s executive said Tuesday.

However, inflation is also on the rise amid sky-high oil prices due to the turmoil sweeping across the Middle East and North Africa, the European Commission warned.

In the latest projections, economic growth in 2011 is expected to be somewhat stronger than anticipated last autumn as Europe’s larger exporting nations enjoy better demand from the U.S. _ at the end of last year, the Obama administration and Republicans in Congress agreed to extend Bush-era tax cuts and unemployment benefits.

“Global growth in 2011 is being revised up, mainly on the back of the additional fiscal stimulus adopted in the U.S. in December,” the Commission said. “The improved environment for the external environment will provide a boost to EU exports, particularly in the more export-oriented economies.”

But while countries like Germany are enjoying the fruits of an improved global economy, others like Spain continue to lag behind as their governments enact harsh austerity measures, such as higher taxes and spending cuts, in an attempt to get a handle on their perilous debt situation.

For the 17-country eurozone, the Commission is forecasting growth of 1.6 percent this year, 0.1 percentage point higher than previously thought. The Commission raised its 2011 forecast for the wider 27-nation EU, which includes non-euro members such as Britain and Poland, by 0.1 percentage point to 1.8 percent.

The eurozone’s recovery from recession has also shown signs of helping the labor market. Eurostat, the EU’s statistics office, reported Tuesday that unemployment in the eurozone fell to 9.9 percent in January. That’s the first time the rate has been below 10 percent since last March.

But while unemployment is showing tentative signs of falling, inflation is on the rise. Eurostat said consumer prices rose 2.4 percent in the year to February, 0.1 percentage point higher than the previous month.

The figure may have been in line with market expectations but inflation is running at its highest level since November 2008 and remains above the European Central Bank’s target of keeping price increases “close to but below” 2 percent.

Though the rise in inflation is unlikely to prompt the ECB to raise its main interest rate from the current record low of 1 percent when it completes its monthly policy meeting on Thursday, a number of rate-setters are getting jittery and the markets are now pricing in the probability of higher borrowing costs towards the end of this year.

The Commission revised its inflation projections up markedly following the recent surge in energy and commodity prices. It now expects inflation in the eurozone in 2011 to be 2.2 percent, instead of 1.8 percent previously.

The Commission noted that the economic slack left over by the deepest recession since World War II, subdued wage growth and well-anchored inflation expectations will keep underlying price pressures in check.

However, much will hinge on developments in the Middle East and North Africa after uprisings in Tunisia and Egypt brought down longtime leaders and unrest in Libya threatens to end the regime of Moammar Gadhafi.

“Should geopolitical tensions spread further in the region, disruptions to oil supply could not be excluded, fueling oil-price increases beyond what is assumed in this forecast,” the Commission said.

In its forecasts for 2011, the Commission is predicting average oil prices of just over $100 a barrel, up from around $80 a barrel in 2010. At the moment, Brent crude in London is trading at a little over $112 a barrel while the New York equivalent, having breached $100 last week, is back down around the $97 mark.

Olli Rehn, Europe’s commissioner for monetary affairs, sought to downplay the impact of higher oil prices on the economic recovery, noting that the increases witnessed so far are not hugely damaging.

“Yes, it has an impact, but with these oil prices … it is still relatively low in Europe,” Rehn said in a press briefing following the publication of the Commission forecasts.

However, if oil prices rise to $200 a barrel, which many analysts think is possible if Saudi Arabia becomes embroiled in the crisis sweeping the Arab World, then the global economy could come to a standstill or fall back into recession.

Rehn noted that a 10 percent increase in the oil price knocks off around 0.1 percentage point off growth in Europe.

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Eurozone finance ministers have decided to provide a permanent crisis mechanism that will come into action in 2013 with euro500 billion (674 billion).

Jean Claude Juncker, who chairs the regular meetings of the 17 eurozone finance ministers, says the ministers “agreed on the provisional volume of euro500 billion, which will be revised every other year.”

Juncker says additional financing will be provided by the International Monetary Fund.

The so-called European Stability Mechanism will succeed the European Financial Stability Facility, the eurozone’s current bailout fund, in 2013.

Ministers didn’t reach a decision on boosting the size of the current facility.

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The old St. Louis Globe-Democrat began the Man of the Year award in 1955. The Post-Dispatch took sponsorship in 1988. A committee of former winners renamed the award Citizen of the Year in 1997.

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Total SA says its quarterly profit slipped 2 percent on flat production and higher write-offs of refining assets even as the oil price surged.

The French oil company says it made euro2.03 billion ($2.8 billion) in the October to December quarter, down from euro2.07 billion a year earlier.

Europe’s third-largest oil company says in a statement Friday that its combined output of oil and gas was stable at 2.4 million barrels a day in the fourth quarter, as higher oil prices led to a decline in the amount of oil Total was entitled to under production sharing agreements with governments of oil producing nations.

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ask the expert

Marc Lopata, chief operations officer

Microgrid Energy

314-657-0955

MLopata@MicrogridEnergy.com

Considering tax law provisions for 2011, is this a good time to install a solar energy system?

Missouri sunshine combined with a package of federal, state and utility incentives makes this a terrific time to install solar. It’s also a good time to take a look at a business’ overall energy performance.

The 2010 tax-cut extension bill allows for faster depreciation and a higher, earlier after-tax cash flow for a new solar energy system.

At the state and utility levels, rules enacting Proposition C, which Missouri voters overwhelming approved two years ago, are scheduled to go into effect this month. The proposition requiring utilities to get some of their energy from renewable sources further improves the business case for solar and keeps Missouri revenue in Missouri easy pay day loans.

An investment in solar for profitable businesses with good credit can deliver positive cash flow every year, shorten the payback period, increase net operating income and produce a double-digit internal rate of return. Combine solar, other renewables and energy efficiency into a corporate energy strategy, and a company can have tools to help manage risk and improve financial performance.

Ameren Missouri rates rose more than 20 percent last year and will continue to go up. No longer is the cost of energy incidental to a company’s profit and loss.

Small firms to the St. Louis Cardinals

Sales perk up in December

House sales in the 11-county region picked up 5 percent in December compared with December 2009, their first month of growth since May.

Dec. ‘09 Dec. ‘10 Change St. Louis County 802 832 3.74%

St. Charles 248 315 27.02%

St. Louis city 212 179 -15.57%

St. Clair 170 173 1.76%

Madison 168 156 -7.14%

Jefferson 114 139 21.93%

Franklin 72 69 -4 payday loans.17%

Lincoln 30 39 30.00%

Warren 29 29 0.00%

Monroe 21 25 19.05%

Clinton 14 18 28.57%

Total 1880 1974 5.00%

Source: MARIS, Realtors Association of SW Illinois, Kelsey Cottrell Realty, Greater Gateway Realtors Association

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A local factory worker has sued Washington University in St. Louis, accusing the university’s doctors and other Missouri health care providers of routinely and illegally over-billing for medical services.

The suit, which seeks class-action status, was filed Friday in the Circuit Court of the city of St. Louis. It asks for actual and punitive damages based on allegations that thousands of insured patients have sustained financial losses and damages as a result of such billing practices.

Specifically, the suit contends that “balance billing,” which most state health care providers use, violates the Missouri Merchandising Practices Act, which deals with consumer fraud and forbids deceptive and unfair practices.

In “balance billing,” a health care provider bills the patient directly for the difference between what a health insurance carrier is willing to pay and the total amount charged by a hospital, doctor’s office or laboratory. The suit contends that Washington University and other providers charge exorbitant prices to patients for “out of network” care, not fully covered by their insurance policies. At its core, the suit challenges the common practice by health providers of charging different prices depending on whether individuals, insurance companies or the government is paying the tab.

“Health care providers should have a flat, set fee for their services, rather than charging different amounts depending on who is responsible for payment,” said plaintiff’s attorney Paul Passanante. “I believe that a jury of 12 people would find that a situation in which the charges for services varies depending on who is responsible for payment constitutes price gouging because it’s discriminatory and unfair.”

Washington University spokeswoman Joni Westerhouse said the college had just received the suit and could not comment. The university’s medical school provides health care services.

Westerhouse said she was not certain whether the university charged different amounts for the same services to Medicare patients, uninsured patients and insured patients who receive care from either pre-authorized “in network” providers and “out of network” providers.

Friday’s petition was filed on behalf of Steven Powell, of St. Louis, an insured patient who was hospitalized in 2008 at Barnes-Jewish Hospital. The hospital’s owner and Washington University, which supplies doctors to Barnes-Jewish, subsequently sued Powell when he refused to pay charges not covered by his insurance carrier payday loan.

The apparent test case names Washington University as “a fair and adequate representative of all the health care providers in the state of Missouri which utilize this unlawful billing practice.”

According to the suit, health care providers often set prices for services that are higher than the charges it has agreed to accept from insurance companies, Medicare and uninsured patients.

Such cost-shifting practices, Passanante said, result in some patients’ having to subsidize the losses incurred by hospitals and health care providers, who are paid less for Medicare and uninsured patients.

He said the practice also called into question whether insurance companies were paying fair rates to providers. “My health insurance carrier has agreed with me to pay health care providers a fair and reasonable amount for the services provided,” he said. “If my health insurance carrier has provided payment in a fair and reasonable amount, why would a health care provider ever be entitled to more than that?”

Greg Thompson, a spokesman for United HealthGroup Inc. in Chicago, said that billing practices varied because some patients had out-of-network benefits and others did not.

“We would encourage that people read and understand what their insurance policy covers and what it does not,” he said, ’so that they’re fully informed, and they can ask their physician appropriate questions about their coverage.”

But patients are not always consulted on their providers. For instance, some laboratories, anesthesiologists and pieces of equipment chosen by in-network providers may not be fully covered by health insurance plans.

“Generally speaking, if you pursue out-of-network care, your insurance is going to pay a portion of your costs but not likely the whole bill,” said Scott Larrivee, a spokesman for Anthem Blue Cross and Blue Shield. “You, the individual, would have to pay the remainder of that bill.”

“When you’re seeking voluntary care, you’re definitely going to want to ask these questions in advance of your surgery, or whatever, to make sure you know what coverages you have and what the expectations are,” he said. “If it’s an emergency situation, we will take a look at those factors.”

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