Debt Deal Puts a Bull’s Eye on Medicaid

As I write, the U.S. Senate has just passed the debt deal that was negotiated with the President over the weekend. It got 269 votes in the House yesterday and 74 votes in the Senate today. It was opposed by both the most progressive and most conservative members.

The immediate effect is a cap on spending that will produce a savings of $1 trillion over the next ten years. There are no new revenues in the deal. There is to be a vote on a balanced budget amendment by the end of the year.

The debt lid is raised immediately by $400 billion and can be raised again in September, effectively removing the lid from the hard bargaining that will take place now over the spending and tax issues affecting the 2012 budget and beyond.

The deal creates a mechanism for bargaining by establishing a new Congressional Committee that is supposed to come up with another $1.5 trillion in debt reduction by December. If the Committee fails in this mission, automatic cuts to both defense and Medicare will be triggered. Trigger-caused cuts to Medicare will be limited to 2 percent and will come from providers and insurance companies only.

Social Security and Medicaid are protected from the automatic trigger. Therefore, Social Security and Medicaid can be cut only through a recommendation of the Committee and further actions in Congress. But, it is important to understand that this Committee process can result in cuts to these programs.

It is unlikely that there will be much appetite for cutting Social Security as we move closer to an election. This puts the target right on the back of the Medicaid program.

This new Committee will have 12 members, equally divided between Democrats and Republicans. A simple majority will rule. The easiest target politically will be the Medicaid program. This means that we will have to redouble efforts to protect this vital program for low income families. Since Medicare is one of the major building blocks for the new health reform program, it is even more essential that it be protected.

Here are some other things that will require attention over the coming months:

1. It is imperative that the new deal forged by the Committee include new revenues.

2. There is a real danger that a vote on the balanced budget amendment will succeed. The extreme Republican version will not have the votes but an alternative may.

3. Pressure should be mounted to end the wars.

4. We should be yelling jobs, jobs, jobs at the top of our lungs. This deal further threatens a very weak economy and will set us backward when it comes to spurring new employment, which we so desperately need – and which should be foremost on the minds of Congress. Unfortunately, Congress seems more intent on protecting corporations and the wealthy from paying their fair share of taxes than on helping our country get back to work.

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