On November 13, the Fiscal Year 2014 Budget Conference Committee held its second public meeting. Congressional Budget Office (CBO) director Doug Elmendorf presented on CBO’s budget and economic outlook and answered questions. Committee Members inquired about numerous budget issues including spending for entitlement programs (Social Security, Medicaid, and Medicare), investments to spur job creation, income inequality, and overall federal spending and revenues. The Committee’s recommendations are due by December 13. View the archived webcast.
Shortly afterwards, CBO released its report “Options for Reducing the Deficit: 2014-2023” which include numerous options for spending cuts and increased revenue and the estimated costs of those options. The list includes a number of options that would be harmful to people with disabilities, including eliminating Supplemental Security Income (SSI) benefits for children; reducing Social Security benefits for new beneficiaries by 15%; using an alternative measure of inflation (the “chained” consumer price index (CPI)) to index Social Security and other mandatory programs; and raising the full retirement age for Social Security.
A new national poll by Hart Research shows that voters reject, by 54% to 38%, a cuts-only approach to deficit reduction. According to the poll, 80% of respondents disapprove of cutting Medicaid, with 63% strongly opposed. Sixty-five percent of respondents oppose cutting Social Security through reductions to the annual Social Security cost of living adjustment (known as the “chained CPI”). The survey also found that two-thirds of respondents say that the richest 2% and large corporations should pay more in taxes. Learn more at Americans for Tax Fairness.
House Budget Committee Chairman Paul Ryan (R-WI) is expected to release a Fiscal Year (FY) 2013 Budget Resolution tomorrow, which is a blueprint for spending and tax policy for the year. This is the first Congressional step in what will likely be a lengthy battle over appropriations levels, tax policy, and deficit reduction. It is doubtful that all these issues, including the automatic spending cuts scheduled to take effect in January 2013, will all be resolved before the November election. If not, then Congress could reconvene in a post-election “lame duck” session to try and resolve the issues and any other outstanding matters. The FY 2013 House Budget Resolution is expected to contain deep cuts in critical domestic spending and include fundamental changes to the Medicaid and Medicare programs. The Senate is not likely to vote on a Budget Resolution this year, as the Budget Control Act already set spending caps for 2012 to 2021.
The House may soon consider two more bills (H.R. 3576 and H.R. 3580) in a package of ten bills to alter the federal budget process. Both bills would limit federal spending to levels similar to those in the House-passed budget resolution last year (known as the “Ryan Budget”) which would block grant the Medicaid program. These two bills would require large cuts in federal spending that would likely fall disproportionately on low-income people, would effectively require that all deficit reduction come from program cuts and none from revenues, and would make it easier to cut entitlement programs (Social Security, Medicaid and Medicare). Learn more at the CBPP website.
The Joint Select Committee on Deficit Reduction announced that it could not reach agreement on a plan to cut the deficit by at least $1.2 trillion over 10 years and authorization for its work expired on November 23. As required by the Budget Control Act, $1.2 trillion in automatic, across the board spending cuts (known as sequestration) are now scheduled to take effect from Fiscal Years 2013 to 2021. Congress can develop other deficit reduction strategies to avoid the automatic cuts, however, it will have to follow the regular legislative process and will not have the advantage of the special legislative procedures authorized under the Budget Control Act for the recommendations of the Joint Select Committee.
Though the official deadline for a vote by the Joint Select Committee on Deficit Reduction is Wednesday, November 23, the real deadline is midnight tonight since any plan has to be posted for 48 hours before it is voted on. At this point, it appears that no such plan will be made available. Republicans continue to criticize Democrats for refusing to accept any spending cuts or substantive changes to entitlement programs (Medicaid, Medicare, and Social Security) without comparable tax increases. Democrats counter that Republicans refused to consider any steps that would ensure top earners provide a share of the savings through higher taxes (a “balanced” solution). Throughout the Committee’s process, The Arc advocated for protecting Medicaid, Medicare, and Social Security because the budget cannot be balanced on the backs of people with disabilities, seniors, and low income populations. It is disappointing that the Committee will likely not come to an agreement that would have protected these critical programs while ensuring significant revenues were part of the solution. Unfortunately, “no deal” at the moment leaves lots of unknowns for the rest of the programs on which people with disabilities rely to live independently in the community. Since the Committee is unlikely to reach agreement by tonight the next step as called for by the Balanced Budget Act is $1.2 trillion in automatic, across the board spending cuts, scheduled to take effect from 2012 to 2021.
On November 7, Democratic members of the Joint Select Committee on Deficit Reduction released a one-page $2.3 trillion deficit reduction proposal. The plan would cut spending by about $1 trillion and increase revenues by the same amount. It includes $400 billion cuts to Medicare and Medicaid. For Medicare, $250 billion in savings would come from providers and $100 billion from beneficiaries. For Medicaid, $13 billion would come from limiting how states tax Medicaid providers in order to increase their federal share of Medicaid and $5 billion would be saved by changing the reimbursement rate for durable medical equipment. Take a look at the Democratic proposal.
On the same day, the Committee’s Republican members offered a $1.5 trillion deficit reduction plan, the details of which have not yet been released. It includes $750 billion in spending cuts and $500 billion in revenue over 10 years. Notably, in an apparent concession to Democrats, it would raise $300 billion in taxes from the individual tax code ($250 billion) and through an overhaul of the corporate tax code ($50 billion). It provides an additional $40 billion in tax revenue from changes to the consumer price index used to calculate federal benefits and income tax brackets. Democrats reacted by claiming the tax revenue is not enough, and must be at least $1 trillion. They also criticized the Republican plan as a large tax cut for the wealthy since it would cut the top individual income tax rate to 28 percent in 2013 (it is currently 35% and will go to 39.6 percent in 2013, when the Bush-era tax cuts would expire).
The Committee has until Nov. 23 to produce a plan that includes at least $1.2 trillion in deficit reduction. If Congress does not endorse a plan or produce an alternative, automatic sequestration of funding begins in 2013. Learn more about the deficit reduction efforts.
Committee Co-Chair Patty Murray (D-WA) urged Republicans at the hearing to consider the efforts of bipartisan groups that wrote proposals in 2010 to reduce the deficit by about $4 trillion through a combination of cuts in entitlement programs (Medicare, Medicaid, Social Security) and discretionary spending, as well as revenue increases. Witnesses at the Nov. 1 hearing included the authors of the plans developed by National Commission on Fiscal Responsibility and Reform and the Bipartisan Policy Center. Witnesses explained their positions on numerous deficit reduction strategies, including block granting Medicaid, imposing per capita caps, and requiring managed care for dual eligibles (those eligible for both Medicaid and Medicare). Visit deficitreduction.gov to view the archived webcast of the Nov 1 hearing.
The Joint Select Committee on Deficit Reduction appears to remain deeply divided over how much revenue a deficit reduction package should raise. Democrats are pushing for a net tax increase of $1.3 trillion over 10 years, while Republicans have opposed any measure that could be construed as raising taxes. The Committee held no closed door meetings last week – a development which is being widely interpreted as a standstill in the negotiations. Lack of discussion following the release two weeks ago of widely differing plans by the Committee’s Democratic and Republican Members does not bode well for the Committee to meet its November 23 deadline for submitting a plan. Meanwhile, some of the House’s most ardent defenders of Social Security have indicated a willingness to consider using a different measure of inflation to calculate cost of living adjustments (COLAs). The proposed measure, the “chained” consumer price index (CPI), would result in lower COLAs for people with disabilities and others who receive Social Security benefits.