Democrats’ Deficit Plan Would Cut $500B From Medicare, Medicaid

On Tuesday, Democrats on the debt panel offered a proposal that would reduce the deficit by almost $3 trillion over 10 years through a mix of spending cuts and revenue increases, including $500 billion in cuts to Medicare and Medicaid, CQ Today reports (Krawzak, CQ Today, 10/25).

As part of the recent budget agreement, the 12-member panel -- also known as the "super committee" -- must develop and pass by the end of November $1.5 trillion in federal spending cuts over 10 years. Failure to do so would trigger a series of automatic across-the-board cuts (California Healthline, 10/17).

Sen. Max Baucus (D-Mont.) presented the plan. A source said Democrats used the plan to reach out to Republicans. However, Rep. James Clyburn (D-S.C.) does not support the proposal, objecting to the Medicare cuts (CQ Today, 10/25).

Despite the offering, Republicans were sharply critical of the plan's tax increases, which would nearly equal its spending cuts, according to Roll Call (Shiner, Roll Call, 10/25).

Discretionary vs. Entitlement Spending

On Wednesday, the debt panel will hold a public hearing that will include testimony about discretionary spending from Congressional Budget Office Director Douglas Elmendorf. Some lawmakers hope the debt panel will focus on making cuts to entitlement programs instead of discretionary programs.

Sen. Lamar Alexander (R-Tenn.) said, "[I]f you look at the Budget Control Act, discretionary spending, 39% of the budget, goes up only at the rate of inflation over the next 10 years." He added, "Entitlement spending, 55% of the budget, goes up at three times inflation. Medicare and Medicaid goes up four times inflation," noting, "So, it's obvious where the problem is" (CQ Today, 10/25).

Previous Deficit Plans

On Nov. 1, the panel will hold another public hearing, which will review previous deficit-reduction proposals. Witnesses will include former White House Chief of Staff Erskine Bowles, former Sen. Alan Simpson (R-Wyo.), former Federal Reserve Vice Chair Alice Rivlin and former Senate Budget Chair Pete Domenici (R-N.M.) (Roll Call, 10/25).

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