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Debt Commission Report Targets Social Security, Medicare

Today's upcoming report by the White House's fiscal commission is expected to include recommendations to raise the retirement age for Social Security and cut Medicare benefits -- two policy prescriptions that will be met with deep opposition from Democrats and some Republicans -- according to a source who has been briefed on the proposal.

The chairmen of the commission will unveil their overarching recommendations for debt and deficit reduction on Wednesday afternoon, weeks before the official unveiling is expected.

The findings are not the final report of the commission, officially known as the National Commission on Fiscal Responsibility and Reform. Rather they are the specific suggestions of its two chairs, former Sen. Alan Simpson and former White House Chief of Staff Erskine Bowles. The ultimate findings will require the support of 14 members of the 18-member commission. And at this juncture it is unclear if the votes are there, sources familiar with deliberation say.

In the process of pursuing their reforms for Social Security and Medicare, the commission chairs are expected to suggest that the end result will be a 70 percent cut in benefits and 30 percent increase in revenues, according to the source familiar with the upcoming announcement.

"What a crazy proposal, what a crazy proposal," said a Democratic source briefed on the findings. "I expect that the White House is going to distance itself big-time from this, saying this is just the chairman not the commission."
3:33 PM ET Disagreement On Panel

Bloomberg News has more on the recommendations and is already recording discord from members of commission.

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.

3:35 PM ET The Details

The draft put out by the commission chairs has been released, coming in at 50 pages. The overarching goal, Simpson and Bowles write, is to achieve "nearly $4 trillion in deficit reduction through 2020" while reducing "the deficit to 2.2% of GDP by 2015."

How they get there is going to be a matter of contention as other commission members have already stressed their displeasure with the suggestions. But here are a few of the more noteworthy suggestions.

• Roll discretionary spending back to FY2010 levels for FY2012, requires 1% cut in discretionary budget authority every year from FY2013 though 2015;

• Fully offset the cost of the "Doc Fix" by asking doctors and other health providers, lawyers, and individuals to take responsibility for slowing health care cost growth;

• Reduce farm subsidies by3 billion per year by reducing direct payments and other subsidies;

• Achieve100 billion in Illustrative Defense Cuts;

• Index retirement age for Social security to increases in longevity. "This option is projected to increase the age by one month every two years after it reaches 67 under current law, meaning the normal retirement age would reach 68 in about 2050 and 69 in about 2075." There will be a "hardship exemption" for those unable to work beyond 62;

• Give retirees the choice of collecting half their benefits early and the other half at a later age to minimize impact of actuarial reduction and support phased retirement options;

• Reduce corporate tax rate to 26% and permanently extend the research credit;

• Gradually increase gas tax to fund transportation spending.
3:37 PM ET Beyond Social Security

A more detailed list of discretionary spending cuts proposed by Simpson and Bowles has been released. Below are a few of the more notable bites at the apple:

* Reduce Congressional & White House budgets by 15 percent;

* Freeze federal salaries, bonuses, and other compensation at non-defense agencies for three hears;

* Cap the number of federal political appointments at 2,000;

* Eliminate the Office of Safe & Drug Free Schools;

* Eliminate all earmarks.;

* Reduce unnecessary printing costs;

* Reduce funding to the Smithsonian and the National Park Service and allow the programs to offset the reduction through fees;
* Cut funding for the Corporation for Public Broadcasting.

3:38 PM ET Gregg, Conrad Weigh In

Retiring Sen. Judd Gregg (R-N.H.) has put out a statement commending the chairs' suggestions but not formally endorsing them.

The proposal that the Co-Chairmen of the Commission have put forward is an aggressive and comprehensive plan for getting federal spending, deficits and the debt under control. I look forward to reviewing it in depth and hopefully improving on it.

It is critical to our nation's future that we take action that puts the country and our children's future back on sound financial ground. This will not be the final proposal, but it is a significant step down the path of establishing fiscal responsibility.

Another committee member, Budget Chair Kent Conrad (D-N.D.) follows suit, echoing Gregg's remark.

We have now received a proposal from the bipartisan co-chairs of the President's Fiscal Commission, Erskine Bowles and Alan Simpson. This is not the conclusion of the commission's work. This is the beginning.

I commend them for putting together a serious proposal. It reveals just how difficult it is to put the nation on a sound fiscal course. Some of it I agree with; some I strongly disagree with. We will have a chance to offer alternatives as we advance the process later today and next week.

3:38 PM ET Expect Some Tweaks

Huffington Post's Lucia Graves, who attended the unveiling, relays the following remark from Bowles, suggesting that there will be tinkering with the recommendations.

We're not asking anybody to vote for this plan. This plan is a starting point. It represents only Al and my thinking and no one else's. We have run it by the President's advisees. I think every member of the commission today said they thought it was a serious plan.

3:39 PM ET Sanders Disappointed

Sen. Bernie Sanders (I-VT) is one of the first non-commission Senators out of the box with a statement opposing the findings.

The Simpson-Bowles deficit reduction plan is extremely disappointing and something that should be vigorously opposed by the American people. The huge increase in the national debt in recent years was caused by two unpaid wars, tax breaks for the wealthy, a Medicare prescription drug bill written by the pharmaceutical industry, and the Wall Street bailout. Unlike Social Security, none of these proposals were paid for. Not only has Social Security not contributed a dime to the deficit, it has a $2.6 trillion surplus.

It is reprehensible to ask working people, including many who do physically-demanding labor, to work until they are 69 years of age. It also is totally impractical. As they compete for jobs with 25-year-olds, many older workers will go unemployed and have virtually no income. Frankly, there will not be too much demand within the construction industry for 69-year-old bricklayers.

Despite all of the right-wing rhetoric, Social Security is not going bankrupt. According to the Congressional Budget Office, Social Security can pay every nickel owed to every eligible American for the next 29 years and after that about 80 percent of benefits.

If we are serious about making Social Security strong and solvent for the next 75 years, President Obama has the right solution. On October 14, 2010, he restated a long-held position that the cap on income subject to Social Security payroll taxes, now at $106,800, should be raised. As the president has long stated, it is absurd that billionaires pay the same amount into the system as someone who earns $106,800.

With the richest people in this country getting richer and the middle class in decline, it is absurd that billionaires pay the same amount into the Social Security system as someone who earns $106,800.

Third-Way, the centrist Democratic organization, meanwhile, calls for a vote on the recommendations even though it seems unclear that the 18-member commission will support them.

The moment of truth is here. The Commission report is the only game in town - and if this wasn't just a campaign slogan, the parties must come together and demand a vote on the Commission's recommendations.

3:40 PM ET Trumka: 'Unconscionable' Cuts

AFL-CIO President Richard Trumka leaves little doubt as to how labor views the recommendations.

The chairmen of the Deficit Commission just told working Americans to 'Drop Dead.' Especially in these tough economic times, it is unconscionable to be proposing cuts to the critical economic lifelines for working people, Social Security and Medicare.

Some people are saying this is plan is just a "starting point." Let me be clear, it is not.

3:41 PM ET White House: No Comment Just Yet

The White House, in a statement from spokesman Bill Burton, weighs in with a statement that falls noticeably short of embracing Simpson and Bowle's suggestions

The President will wait until the bipartisan fiscal commission finishes its work before commenting. He respects the challenging task that the Co-Chairs and the Commissioners are undertaking and wants to give them space to work on it. These ideas, however, are only a step in the process towards coming up with a set of recommendations and the President looks forward to reviewing their final product early next month.

3:42 PM ET The Real Danger

The Huffington Post's Ryan Grim, after looking through the chairs' suggestions, offers the following observation of the dangers they could pose to Social Security.

The most direct assault on Social Security, however, may not be the increase of the retirement age, but rather an attempt to tilt the program toward a welfare model and away from the current, universal insurance model that has made it popular and enduring despite 75 years of attacks. The co-chairs propose to "increase [the] progressivity of [the] benefit formula by creating a new bendpoint at the 50th percentile." Such a move would require means testing. In other words, the government would determine benefits based on a beneficiary's assets and other sources of income. Currently, beneficiaries are paid benefits based on their contribution over their working life. Replacing the social insurance model with a welfare model would erode support, encourage fraud and ultimately undermine the program.

3:51 PM ET 'Equal Opportunity Disaster'

“The Fiscal Commission Co-Chairs’ proposal is an equal opportunity disaster," said Eric Kingson of the Strengthen Social Security Campaign. "It cuts benefits for today’s seniors and persons with disabilities. It cuts Social Security benefits for virtually every American alive today and yet to be born."
4:01 PM ET Krugman: They Can't Be Serious

Paul Krugman is less than impressed by the recommendations put forward by Bowles and Simpson.

In a post titled "Unserious People," The New York Times' Nobel Prize-winning economist explains that if the retirement age is raised, those who make the least will be paying for those who make the most.

"Oh, and they’re talking about raising the retirement age, because people live longer — except that the people who really depend on Social Security, those in the bottom half of the distribution, aren’t living much longer. So you’re going to tell janitors to work until they’re 70 because lawyers are living longer than ever."

4:04 PM ET Grijalva: A Plan That Favors The Wealthy

Statement from Rep. Raul Grijalva (D-Ariz.), who helped organize a letter of lawmakers opposing debt commission cuts to Social Security:

If the co-chairs of the deficit commission were dead set on gutting Social Security and Medicare from the beginning, they could have saved time and effort by releasing this proposal the day after the commission was formed. Instead, we have waited through nine months of backroom negotiations only to be told that the American people will have to tighten their belts another notch while defense spending continues to grow and corporate bonuses continue to expand.

The path this plan would set is not good for the public. Congress should be having a realistic, productive conversation right now about how to reduce our budget deficit and maintain a secure retirement system for those who have earned it. Instead, we’re debating a proposal from a commission dedicated to cutting crucial social programs and reducing corporate and upper-income taxes at the same time. This is not a recipe for a healthier American economy.

Real budget reform must begin by allowing the Bush-era tax cuts for the wealthiest two percent of earners to expire, as they were always designed to do. This would reduce the debt by at least $680 billion over the next 10 years, according to the Department of the Treasury. The middle class has already been hit extremely hard by the ongoing economic downturn and the housing crisis. The last thing we should do is take more money out of their pockets in the name of a conservative tax cut agenda that favors the wealthy over the rest of us.

4:07 PM ET It's Not Conservative Enough?

Commission members Reps. Dave Camp (R., Mich.), Paul Ryan (R., Wis.) and Jeb Hensarling (R., Texas) have issued a joint statement that explicitly does not endorse the co-chairs' report:

We appreciate the leadership of Alan Simpson and Erskine Bowles on the Fiscal Commission, and their shared commitment to addressing our pressing fiscal challenges. This is a provocative proposal, and while we have concerns with some of their specifics, we commend the co-chairs for advancing the debate. We will continue to work toward solutions that help spur economic growth and restrain the explosive growth of government spending.

4:09 PM ET Pro-Tort Reform & Pro-Public Option

Over at the Wonk Room, Igor Volsky looks into what the debt commission report says about health care:

On the health care side, the proposal strengthens some existing provisions in the Affordable Care Act, calling for the expansion of successful payment reforms and a far stronger Independent Payment Advisory Board (IPAB), which will advise Congress on how to control health care spending. The proposal also embraces the oft-repeated GOP idea of tort reform and throws progressives a bone by recommending that a public option be inserted into the exchanges along with an all-payer rate setting system.
http://www.huffingtonpost.com/2010/11/10/debt-commission-report-social-security-medicare-_n_781606.html