US cuts Social Security and Medicare

11-Nov-2010

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Adam Siemiginowski started blogs with a background in Information Systems and Finance, graduating from Fairfield University’s Dolan School of Business. His broad experience with tech/media startups allows him to see the big picture, forecasting trends before the market realizes them.







U.S. Debt Propasal Would Cut Social Security, Medicare

By Heidi Przybyla and Brian Faler – Nov 10, 2010 12:53 PM ET

Co-Chairman Erskine Bowles

Erskine Bowles, co-chairman of the National Commission on Fiscal Responsibility and Reform. Photographer: Andrew Harrer/Bloomberg

The co-chairmen of President Barack Obama’s debt-reduction commission will propose cuts to Social Security and Medicare, as well as reductions in income tax rates in exchange for curbing tax breaks, according to a Republican aide who attended the meeting.

The chairmen’s plan is already causing some Democrats and Republicans on the 18-member commission to balk. The plan will be announced at 1 p.m. Washington time today, said commission spokesman Fred Baldassaro.

“This is not a package that I could support,” Representative Jan Schakowsky, an Illinois Democrat, said during a break in a private meeting by the commission. She said any package able to win 14 votes on the panel would have to look “very different” from the options being discussed.

Senator Dick Durbin, an Illinois Democrat, called the plan a “starting point for the conversation.”

“We’re not going to have an up-or-down vote on this,” said Durbin. “There are proposals in there that are painful. I told them I said there are things in here which inspire me and other things which I hate like the devil hates holy water. I’m not going to vote for those things.”

Some Republicans also expressed skepticism that the report would survive in its current form. New Hampshire Senator Judd Gregg called the plan a “starting point.” Representative Jeb Hensarling of Texas said “some of it I like, some of it disturbs me.”

No Endorsements

Schakowsky said no one outside of panel co-chairmen Erskine Bowles, former President Bill Clinton’s chief of staff, and Alan Simpson, a Republican former Wyoming senator, has endorsed today’s proposal.

The government is projected to run $8 trillion in deficits over the next 10 years, which would push the national debt up to more than $20 trillion. Obama directed the commission to find a way to reduce the annual deficit to 3 percent of the nation’s gross domestic product by 2015 from about 9 percent now.

Social Security and Medicare, the government health program for the elderly and disabled, will consume a steadily growing share of the federal budget.

The commission has been looking at curbing the more than $1 trillion in tax breaks Congress provides for items such as corporate research and child care, as a way to raise money.

The panel is seeking to reach an agreement by Dec. 1, when it’s due to report to Congress. Most economists say any effort to reduce the deficit will require some combination of spending cuts and tax increases.

Schakowsky said the plan aims to make Social Security solvent, not to reduce the deficit.

Still, she said, “It’s not the proposal I could support at this time.” Democrats are likely to resist spending cuts, while tax increases “would be a nonstarter” for many Republicans, she said.

The panel consists of current and former lawmakers from both political parties, as well as corporate executives and other experts. An agreement would require the vote of 14 of the commission’s 18 members.

To contact the reporters on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net; Brian Faler in Washington at bfaler@bloomberg.net;

To contact the editor responsible for this story: Mark Silva at msilva@bloomberg.net

via Bloomberg

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