Tennessee senators Bob Corker and Lamar Alexander have introduced a plan to reduce the growth in federal entitlement spending by almost $1 trillion in exchange for increasing the nation’s debt limit by $1 trillion, possibly this spring.
The Dollar for Dollar Act of 2012 would reduce the growth in spending on Medicare, Medicaid, and Social Security, according to a statement posted on Corker’s website. Most of the spending reductions—$689 billion—would come from Medicare reform.
Corker and Alexander seemed confident that Congress and the White House would reach a deal in the so-called “fiscal cliff” negotiations, a high-stakes debate that has dragged on for weeks over how to avoid automatic spending cuts and tax increases starting Jan. 1.
“When the dust settles, federal income taxes will not increase for almost all Americans next year,” Corker and Alexander said.
The two Republicans said their dollar-for-dollar plan “focused on helping Americans avoid falling off the fiscal cliff no one wants to talk about, the looming bankruptcy of Medicare.”
“Millions of Americans are counting the days until they are eligible for Medicare,” the senators said. ”It would be tragic if Medicare were bankrupt when that day comes.”
They said the program—which provides federal health insurance for people who are 65 or older, certain younger people with disabilities, and people with end-stage renal disease—could be bankrupt in 2024.
Among other things, their reform plan would incrementally raise the eligibility age to 67 by 2027 and require higher-income beneficiaries to pay more for their premiums.
The senators’ entitlement reform plan would also slowly raise the Social Security retirement age and “benefit computation period to better reflect longevity increases.”
Corker introduced the Dollar for Dollar Act, or S. 3673, on Dec. 12, and Alexander co-sponsored it. The senators said it contains provisions recommended by President Barack Obama’s Debt Commission, known as Simpson-Bowles, as well as by former Republican Sen. Pete Domenici and Alice Rivlin, budget director for former President Clinton.
Here is more information from the senators’ statement:
The plan, which would allow seniors to continue to choose traditional Medicare among several options, would:
- Structurally reform Medicare, keeping traditional Medicare in place and competing side-by-side with private options so that seniors can choose the health care plan that works best for them. Significantly reduce costs without capping spending while preserving for seniors the choice of participating in traditional Medicare;
- Give states more flexibility to manage their Medicaid programs and prevent states from using so-called “bed taxes” to get more money from the federal government;
- Reform Social Security and gradually raise the retirement age so that today’s workers can count on the program being solvent and able to pay benefits when they retire;
- Enact a more accurate measure of inflation which both raises revenues and reduces entitlement spending;
- Raise the debt ceiling by $1 trillion which could last about one year at the new levels of spending.
But the political news website Politico reported that the proposal is likely to be a “nonstarter” among Democrats, who are likely to oppose attempts to use the debt ceiling to extract spending cuts, especially on entitlements.
And Obama has said he will not negotiate with Republicans over the debt limit, Politico reported.
Still, in their statement, the senators said it would be a “colossal failure of leadership” if the president does not take advantage of proposals such as theirs.
“There are 535 of us in Congress with ideas, but there is only one president,” Corker and Alexander said. “The president needs to do as good a job rescuing seniors in danger of falling off the Medicare fiscal cliff as he has persuading Americans that Congress should raise taxes on the rich.”