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"Big Twelve" Named to Joint Congressional Deficit Reduction Committee

Pursuant to the Budget Control Act of 2011 (the BCA, P.L. 112-25), Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, House Speaker John Boehner and House Minority Leader Nancy Pelosi named their appointments to the joint congressional committee which is to recommend at least $1.5 trillion in federal spending reductions by December 23rd.  Failure of the committee to act would “trigger” $1.2 trillion in spending cuts evenly distributed between defense and non-defense accounts (with a cap on Medicare cuts for providers limited to 2% and no cuts to Medicaid, Social Security and low-income programs). 

Senator Reid appointees are:

  • Sensator Max Baucus (D-Mont.), Chairman of the Senate Finance Committee
  • Senator John Kerry (D-Mass.)  and
  • SenatorPatty Murray (D-Wash.)

Senator McConnell appointees are:

  • Senator. Jon Kyl (R-Ariz.), the Assistant Republican Leader
  • Senator Rob Portman (R-Ohio), former OMB Director and
  • Senator Pat Toomey (R-Pa.)

House Speaker Boehner appointees are:

  • Congressman Dave Camp (R-Mich.), Chairman of the Ways and Means Committee
  • Congressman Jeb Hensarling (R-Texas), a member of the House Leadership and
  • Congressman Fred Upton (R-Mich.), Chairman of the Energy and Commerce Committee

Minority Leader Pelosi appointees are:

  • Congressman Xavier Becerra (D-Calif.), a member of the House Leadership
  • Congressman James Clyburn (D-S.C.), Assistant Democratic Leader and
  • Congressman Chris Van Hollen (D-Md), ranking Democrat on the Budget Committee

If the committee fails to agree on a deficit reduction plan, the “trigger” would require $600 billion in domestic program cuts over ten years which could short-change the implementation of the PPACA as intended.  However, the S&P downgrade of the U.S. debt to AA+ could serve as incentive for the committee to come up with the S&P’s desire to see $4 trillion in deficit reduction, including reforms to Medicare and other entitlement programs.  Perhaps the GAO has paved the way for the committee to find cost savings from curtailing waste, fraud and abuse from federal health programs.  A new GAO report finds that Medicare tops the list of wasteful spending programs with $48 billion in FY 2010 improper payments.  Republicans on the committee will likely propose changes to scale-back the cost of the PPACA, Medicare and Medicaid, while Democrats can be expected to avoid cutbacks to these programs.  For example, Rep. Becerra voted against the President’s Deficit Reduction Commission recommendations citing entitlement cutbacks.  Congressional committees have until October 14th to make recommendations to the joint committee.  Individual members are already ahead of the curve is stating their preferences, with Rep. Mike Quigley offering up a budget plan that would trim deficits by $2 billion over ten years, including by giving CMS the authority to negotiate drug prices with manufacturers under Medicare Part D.  Senator Reid stated that if Republicans continue to say there can be no new revenues under the plan, then there will be no agreement.  In this connection and further complicating the committee’s negotiations is a dispute over the budget “baseline” to be used by the panel in counting revenue increases and spending reductions.  House Budget Committee Chairman Paul Ryan maintains that the BCA requires the committee to use the CBO’s current law baseline if their recommendations are to be passed by Congress.  The CBO baseline assumes that the 2001 and 2003 “Bush” tax cuts expire as scheduled at the end of 2012 which would make tax increases nearly impossible, including the President’s proposal to extend the tax cuts to the middle class.  Democrats will argue that the committee has the authority to set their own budget “baseline” for scoring committee recommendations.  Beyond the federal budget consequences, a committee agreement to squeeze Medicare or Medicaid spending will likely have negative consequences for health providers.  For example, according to the S&P credit rating agency, various hospital and other health providers could receive credit downgrades if any deficit reduction agreement results in significant federal payment reductions to their institutions.

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