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US Deficit Panel Focuses on Cuts to Medicare, Social Security

By       Message Patrick Martin       (Page 1 of 2 pages)     Permalink

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The bipartisan congressional committee charged with drafting a plan for slashing the US federal budget deficit entered the final week of its internal discussions, with talks reportedly focused on cuts in Medicare and Social Security. The two federal social programs provide retirement income and medical benefits for tens of millions of elderly people.

The committee is required to propose by November 23 at least $1.2 trillion in deficit reduction over the next 10 years. Both houses of Congress must then give an up-or-down vote on the plan, with no amendments or Senate filibuster allowed, under the provisions of the bipartisan agreement last August that lifted the federal debt ceiling.

If the committee fails to approve a plan by a majority vote of its 12 members, or either house of Congress votes the plan down, automatic budget cuts of roughly $1.2 trillion would be imposed on domestic discretionary and military spending, to take effect in January 2013.

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The deficit committee has been deadlocked over the same issue that stalled the debt ceiling talks during the summer. The Democrats call for token tax increases on the wealthy in order to give the overall austerity package a fig leaf of "fairness," even though by far the greatest burden falls on working people. The Republicans reject any tax increases on the wealthy, denouncing such proposals as "class warfare."

Press reports of the negotiations being conducted between the six Democrats and six Republicans on the bipartisan committee, and between the committee members and the party leaders in both houses of Congress, suggest that the Democrats are prepared to adopt devastating cuts in Medicare and Social Security if the Republicans shift their position even marginally on taxes.

The preliminary offer put forward by the committee Democrats involved $4 trillion in deficit reduction, far more than the $1.2 trillion required, with significant cuts in social programs for the elderly, including raising the age of eligibility for Medicare from 65 to 67 and changing the formula for calculating cost-of-living raises for Social Security recipients to reduce their future benefits.

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The initial Republican response came in at $2.2 trillion, largely in spending cuts, but including $600 billion labeled "new revenue," although it was largely a bookkeeping fiction and required the Democrats to agree to extending indefinitely the Bush tax cuts for the wealthy.

The next round of offers closed the gap slightly. The Democrats proposed a $2.3 trillion package, including $1 trillion in cuts, $1 trillion in tax increases, and $300 million savings on interest payments. The Republicans proposed a much smaller increase in revenues, including no more than $40 billion -- a tiny sum in federal deficit terms -- in actual tax increases from closing tax loopholes for corporations and the wealthy.

This was hailed by sections of the liberal media and the Democratic Party congressional leadership as a major breakthrough. The Washington Post editorialized, "The Republican proposal does not constitute balance, but it is a step in the right direction. Democrats should treat it as a constructive step in a negotiation."

While Senate Majority Leader Harry Reid called the Republican offer a "phony" plan, his deputy, Majority Whip Richard Durbin of Illinois -- the Senate leader closest to Obama -- described it as "an important step forward."

He told a press conference, "The fact that some Republicans have stepped forward to talk about revenue, I think, is an invitation for Democrats to step forward and talk about entitlement reform as well as spending cuts. Therein lies the core of an agreement."

In official Washington jargon, "entitlement reform" means robbing the elderly of the pensions and health care coverage they have been promised.

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In the wake of the Republican offer, several right-wing Senate Democrats declared publicly they supported "entitlement reform." These include Mary Landrieu of Louisiana and Michael Bennet of Colorado, both of whom were quoted by the New York Times Friday.

The Los Angeles Times reported Saturday that a "fallback plan is emerging" that would enact the cuts in entitlement spending now while deferring final decisions on taxes until after the November 2012 election, perhaps in a lame-duck session.

According this account, "Democrats would have to allow sizable cuts to Medicare, Medicaid and other cherished domestic programs, and Republicans would need to loosen their signature anti-tax stance. In proposals that have been exchanged so far, Democrats offered a package that would be made up of equal parts spending cuts and new tax revenues -- but would push the tax component to next year."

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Patrick Martin writes for the World Socialist Website (wsws.org), a forum for socialist ideas & analysis & published by the International Committee of the Fourth International (ICFI).

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