Debt Committee Says Tax Reform, Medicare Spending Keys to Cutting Deficit

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Members of the bipartisan debt reduction committee said during the panel's first meeting Sept. 8 that cutting spending on entitlement programs like Medicare and reforming the tax code are the best ways of reducing the deficit.

“This committee must be primarily about the business of saving and reforming social safety net programs that are not only failing many beneficiaries but going broke at the same time,” Rep. Jeb Hensarling (R-Texas), one of the committee's co-chairmen, said in his opening statement. “It's past time to quit spending money we don't have.”

The 12-member panel, which is bipartisan and bicameral, was created by the Budget Control Act of 2011. The committee will consider budget cuts and revenue increases (148 HCDR, 8/2/11).

The panel is charged with coming up with an additional $1.5 trillion in deficit reduction over 10 years. Failing to do so would trigger across-the-board spending cuts. Under the law, the panel is to report its ideas, with legislative language, no later than Nov. 23 and send it to the floor of the House and Senate for passage before Dec. 23.

“Cutting spending is essential to jump-start our economy and prevent the kind of downturn we are being warned about,” Rep. Fred Upton (R-Mich.) said in his statement. “If we do not succeed, we risk further damage to our credit rating and a deeper erosion in confidence—both of which will worsen the cycle.”

Upton, who is chairman of the House Energy and Commerce Committee, pointed to nearly $60 billion in federal spending that could be eliminated “by reforming our broken medical liability system, and we can save tens of billions more by simply wiping out some of the unaccountable spending in the health care law.”

Sen. Patty Murray, (D-Wash.), the supercommittee's other co-chair, said there is “broad agreement among us that economic growth and job creation are the best ways to reduce the deficit and debt.” In a nod to partisan differences, she noted “we certainly have some real differences regarding how to achieve that.”

Rep. Dave Camp (D-Mich.) said the committee's final decision “must be looked at through the prism of job creation—will the recommendations we make help or hurt job creation now and in the future.”

Options Floated

Prior to the organizational meeting, House Democratic legislative aides prepared a summary of health care savings options that could come before the deficit reduction committee and that offers a look at how various players could react to potential changes in Medicare and Medicaid (174 HCDR, 9/8/11).

The document details health care options that have been proposed previously by various commissions and lawmakers.

Examples of options with the biggest anticipated savings include establishing a Medicare Part D drug rebate from drug companies for dual-eligible (Medicare and Medicaid) beneficiaries and low-income subsidy recipients ($120 billion in estimated savings over a decade), and raising Medicare's eligibility age to 67 (estimated savings of $124 billion).

The summary document drafted by Democratic staff said that Republican lawmakers might recommend repealing portions of the Patient Protection and Affordable Care Act to find savings.

The document said those options “would come at the expense of lower- and middle-income working families and possibly even states. They would also lead to a substantial increase in the number of uninsured relative to current law projections.”

The panel's next meeting will be Sept. 13.

By Nathaniel Weixel