The Gang of Six plan unveiled to senators on Tuesday punts on key details, including exactly how it would reform Social Security and Medicare, according to a detailed outline obtained by The Hill.
The plan adopts a two-track approach: a $500 billion down payment and a later reform bill generating an additional $3.2 trillion in deficit reduction. That later bill is largely left up to committees of jurisdiction, and they are only required to meet specific savings targets.
On healthcare entitlements, the plan would seek to hold the growth of spending to GDP plus 1 percent per beneficiary, but it largely leaves it up to committees to decide how to achieve the savings.
The plan would be held at the Senate desk until a Social Security fix is found, and if that fix does not get the 60 votes required, the rest of the deficit plan is voided. The reform must ensure 75 years of solvency for Social Security, according to the Gang of Six, but how to achieve that is left up to the Finance Committee. If Finance cannot agree, a group of 10 senators — five from each party — can bring a reform bill to the floor.
A $500 billion immediate down payment would be achieved through discretionary caps imposed through 2015, by instituting a new measure of inflation known as the chained Consumer Price Index (CPI), freezing congressional pay and selling federal property.
The down payment would also repeal The Class Act, a long-term-care insurance plan.
Chained CPI would cause Social Security benefits and tax deductions to be lowered, the use of which has been loudly opposed by seniors' lobbying groups. To address senior concerns, the plan exempts Supplemental Security Income from the shift for five years and provides a minimum benefit equal to 125 percent of the poverty line for five years.
Part One of the plan would also require the Government Accountability Office and Labor Department to find a new way to administer unemployment insurance.
For Part Two, the plan would require committees of jurisdiction to report bills within six months. The Finance Committee would be charged with legislating a permanent “doc fix” and fully offsetting the cost of healthcare savings. It would also be required to find an additional $202 billion in healthcare saving.
Among other committees, Armed Services would be required to find $80 billion in cuts from the Pentagon budget, while Agriculture would be required to find $11 billion in savings while protecting food stamps. The plan also requires medical malpractice reform, a nod to the GOP.The Budget Committee would be left to decide discretionary caps after 2015 and before 2021.
Finance would be required to reduce tax rates to three tax brackets of rates: of 8-12 percent, 14-22 percent and 23-29 percent. The current top marginal rate is 35 percent.
The corporate tax rate would be between 23 percent and 29 percent, and tax reform would cease taxation of oversees profits. *
Sens. Kent Conrad (D-N.D.), Mark Warner (D-Va.), Dick Durbin (D-Ill.), Mike Crapo (R-Idaho), Saxby Chambliss (R-Ga.) and Tom Coburn (R-Okla.) back the Gang plan and are hoping to get 60 senators to support it within the next few days. The framework could be attached to the debt-ceiling compromise.
*"Finance would be required to reduce tax rates to three tax brackets of rates: of 8-12 percent, 14-22 percent and 23-29 percent. The current top marginal rate is 35 percent.
The corporate tax rate would be between 23 percent and 29 percent, and tax reform would cease taxation of oversees profits."
This is madness. Lowering the tax rates to deal with deficits? Let's just get out the leeches to cure disease.
Corporations get everything they want, and the middle class loses the benefits it's paid for (which has been lent to the rich via transfers to the general fund over the years, at great interest rates).
The deductions that are cut will be those designed for the middle class, not the rich (who deserve tax breaks). I'd bet my life on it.
The gang of six will finally finish off the middle class. Congrats, boys.
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