GOP Members of Debt Panel Call for Medicare Reforms, Tax Revenue

Republican members of the debt panel recently offered a plan to reduce the deficit by about $1.5 trillion over 10 years by increasing tax revenue by $300 billion and raising the Medicare eligibility age from 65 to 67, the AP/Washington Post reports. The plan also would increase Medicare premiums (AP/Washington Post, 11/8).

Democrats and Republicans on the debt panel have had a long-standing impasse over the GOP's refusal to accept tax increases and Democrats' insistence against cutting entitlement programs. The GOP proposal marks the first time Republicans have considered actual tax increases as part of deficit-reduction strategies.

Plan Details

The Republican plan would rewrite the tax code to lower the tax rate for all U.S. residents, while eliminating itemized deductions. It also would push people more rapidly into higher tax brackets.

However, the increases would be offset by permanently extending tax cuts enacted under President George W. Bush, which would increase deficits by about $4 trillion over 10 years. Senior Republican aides characterized the proposal as a "significant concession" on taxes (Montgomery, Washington Post, 11/8).

Democrats Criticize Proposal

Democrats criticized the plan, saying the total tax revenue is too small when compared with the national debt (AP/Washington Post, 11/8). They also said the tax cuts for the highest-income U.S. residents overshadow the increases.

Sen. John Kerry (D-Mass.) acknowledged that the plan represents "a change" in the GOP's position on taxes. However, he said, "I would not characterize it as a substantial change yet" (Washington Post, 11/8).

A Democratic aide called the plan a "shell game," adding that it is "a thinly veiled attempt to appear to put revenue on the table while simultaneously removing far more with massive tax cuts for wealthy Americans" (Friedman, National Journal, 11/8).

Meanwhile, Senate Minority Leader Mitch McConnell (R-Ky.) argued that Republicans are "working diligently to get a solution" and said Democrats are trying to block the deal (Washington Post, 11/8).

CBO Report Shows Decline in Government Spending

In related news, the Congressional Budget Office on Tuesday released a report showing that government spending remained relatively flat in fiscal year 2011, which ended on Sept. 30, Politico reports.

It found that combined federal outlays for Medicare, Medicaid and other entitlement programs increased by only about 3%, which is less than half of the average of the previous five years.

Still, the federal deficit continued to grow, as it was well above $1 trillion for the third consecutive year. According to Politico, the report indicates that even if federal spending were held in check, the deficit would continue to grow without benefit reforms and increased tax revenue (Rogers, Politico, 11/8).