Legislative Update: Deficit Reduction Committee To Release $1.2 Trillion Plan By Thanksgiving

Legislative Update: Deficit Reduction Committee To Release $1.2 Trillion Plan By Thanksgiving

By Jessie Gibbons, TSCL Legislative Analyst

For the new Joint Select Committee on Deficit Reduction, time is of the essence. The Committee, which was created under the law that lifted the debt limit in August, is charged with the task of finding $1.2 trillion in savings by Thanksgiving – a feat that many Washington insiders have had their doubts about from the very beginning.

The Joint Committee is made up of twelve lawmakers: six Senators and six Representatives, half appointed by the Republican leadership, and half appointed by the Democratic leadership.  The two chosen to co-chair the Committee are Democratic Senatorial Campaign Committee Chair Patty Murray (WA) and House Republican Conference Chair Jeb Hensarling (TX) – two high-ranking party loyalists.

The twelve members appointed to the Joint Committee know well that compromise will not come easily, given the polarized political atmosphere in Congress. One key player on the Committee, Senate Minority Whip Jon Kyl (AZ), acknowledged this reality early on, and his expectations for the Committee seem quite low.  In an August press release, he stated: “There are very different ideas about how to reduce spending … It may be that the next election will settle these issues before the current politically divided Congress can.  Nonetheless, I am willing to try…”

The Joint Committee is allowed to tackle any part of the budget that they wish – including Social Security, Medicare, Medicaid, and tax reform.  Proposals made recently by groups like the “Gang of Six” and President Obama’s Fiscal Commission will surely

be considered.  Raising the retirement age, increasing Medicare means-testing measures, restricting Medigap coverage, and switching to the “chained” CPI for determining Social Security cost-of-living adjustments (COLAs) are some of the preferred options among Washington’s deficit hawks.  Any of them could appear in a final proposal.

But what happens if the Committee cannot come to an agreement, if Congress fails to act on it, or if the President vetoes it?

Automatic triggers would go into effect, cutting both mandatory and discretionary spending to generate a total of $1.2 trillion in savings over ten years.  Under the debt limit deal, Social Security and Medicaid should remain unaffected, but beginning in 2013, Medicare would see a 2% cut in payments to hospitals and other providers like skilled nursing facilities.

Some analysts say these provider cuts are the lesser of evils, since the automatic triggers would affect providers exclusively and should leave Medicare’s actual benefit structure untouched. In fact, the Congressional Budget Office recently estimated that the cuts to Medicare providers would result in lower premiums for Part B.  That suggests that Medicare beneficiaries would potentially benefit from the savings.  But providers say that across-the-board cuts could be more harmful than expected.  Some physicians – specialists, for example – might be able to cope better with payment reductions than others, like general practitioners.  Providers have already warned that they would not be able to absorb the payment cuts without making adjustments to the services that they currently provide.  To compensate, physicians could stop accepting new Medicare patients, or worse, they could stop seeing them altogether.

Protecting seniors from harsh benefit cuts and unintended consequences, like loss of access to care, will remain a priority for The Senior Citizens League (TSCL) in the coming months.  We will continue to monitor the Joint Committee’s progress and provide seniors with a nonpartisan voice on Capitol Hill.


To learn more, please visit www.SeniorsLeague.org.