Authors of Earlier Debt Plans Call for Spending Cuts, Revenue Increases
On Tuesday, the developers of two previous bipartisan deficit-reduction plans told members of the debt panel that they should both raise revenues and make cuts to entitlement programs to reduce federal spending by $1.5 trillion over 10 years, the AP/Washington Post reports (AP/Washington Post, 11/1).
One debt plan was developed by former Sen. Alan Simpson (R-Wyo.) and former White House Chief of Staff Erskine Bowles, while the other was crafted by Alice Rivlin, founding director of the Congressional Budget Office, and former Senate Budget Chair Pete Domenici (R-N.M.) (Shiner, Roll Call, 11/1).
Both plans would have saved roughly $4 trillion over 10 years.
All four individuals testified at a public hearing of the debt panel and provided recommendations for a new deficit-reduction plan (O'Donnell/Friedman, National Journal, 11/1). They all urged the panel to go well beyond its savings goal, even though the committee has only about three weeks to develop a plan and recommend it to Congress (AP/Washington Post, 11/1).
Simpson, Bowles Offer Recommendations
Simpson suggested both parties should concede their strict positions in the talks to this point. Democrats have resisted deep cuts to entitlement programs, while Republicans have insisted against any tax increases. He added that if the parties fail to compromise on these issues, the government does not have "a prayer" to make meaningful deficit reductions.
Simpson and Bowles suggested a package that could cut the deficit by $2.6 trillion over a decade, with $600 billion in cuts to health care programs -- such as Medicare and Medicaid -- and $800 billion in new revenue (Pear, New York Times, 11/1). Bowles also said he supports raising the Medicare eligibility age to reduce spending (Zigmond, Modern Healthcare, 11/1). In addition, Bowles suggested testing the feasibility of replacing Medicaid's current open-ended system with fixed Medicaid block grants.
All four witnesses said they support making higher-income Medicare beneficiaries pay more for services (New York Times, 11/1).
Rivlin, Domenici Offer Proposals
Meanwhile, Rivlin and Domenici proposed a new model for "premium support" in the Medicare program, which involves allowing seniors to get services through private insurance vouchers or remain in the existing program.
Senate Finance Committee Chair Max Baucus (D-Mont.), a member of the debt panel, asked about the possibility of private plans attracting the healthiest seniors under the scenario, leading traditional Medicare to cover a sicker, more costly population.
Rivlin said the model likely would avoid that by requiring private plans to cover individuals regardless of their health and compensating plans that accept sicker patients (Baker, "Healthwatch," The Hill, 11/1).
Witnesses Concerned Panel Will 'Fail'
Bowles suggested that both parties' unwillingness to compromise on entitlement spending and taxes could lead to the panel's failure. He said, "I have great respect for each of you individually. But collectively, I'm worried you're going to fail."
Rivlin predicted "devastating" consequences if the panel cannot develop a significant deficit-reduction plan. She said, "We could face a long period of stagnant growth, another recession that would be worse than the one we're slowly climbing out of" (AP/Washington Post, 11/1).
However, GOP sources said on Monday that Republican leaders and panel members might be willing to close certain tax loopholes to break the stalemate with debt committee Democrats. The sources said any new GOP offer likely would require a revenue-neutral tax reform plan (Friedman, National Journal, 10/31).
Despite those reports, Rep. Jeb Hensarling (R-Texas) suggested after the hearing that he still is skeptical of Democrats' calls for additional tax revenues. He said, "The focus on revenues is a diversion from the real source of the problem, and that is health care spending," adding, "Unless we fundamentally, structurally reform our health care programs, everything else we do is tinkering around the edges" (New York Times, 11/1).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.