FEDERAL DEFICIT AND SUPER COMMITTEE

Potential Targets: Social Security & Medicare

NOVEMBER 2011 VOICE: In early August, the US Congress and President Obama reached a compromise agreement to raise the Federal Debt Ceiling, as well as cut an immediate $900 billion in federal spending. The compromise also created a 12-member Congressional “Super Committee” tasked with cutting at least another $1.5 trillion in federal spending over 10 years.

The Committee of six Democrats (including our Senior Senator, John Kerry) and six Republicans has until November 23 to make its proposal to the full Congress, which then must be voted on by December 23. If Congress fails to act, the law calls for $1.2 trillion in automatic spending cuts to take effect.

While Social Security, which is funded through the payroll tax, is exempt from automatic cuts, Medicare, defense spending and most other discretionary federal spending programs would be impacted. And, even though its not subject to automatic cuts, Social Security will most likely be on the table through the Committee’s deliberations.

Association officials remain in close contact with Senator Kerry and have already expressed our views and concerns on the potential impact of federal spending cuts on public retirees and survivors. We will continue to work closely with the Massachusetts Congressional Delegation, as well as with our Washington, DC lobbying team, to ensure our members’ interests are addressed.

“Shortly after being named to the Committee, Senator Kerry reached out to our Association asking that we keep the lines of communication open as these serious issues are debated. From our standpoint, it is vitally important that ultra conservative plans to dismantle Social Security and Medicare do not go forward,” explains Association Legislative Liaison Shawn Duhamel. “Despite what some critics may say, both programs are not only successful, but are depended upon by millions of retirees. Social Security and Medicare should be strengthened, not destroyed. And, there are ways of doing this that does not jeopardize our economic future.”

Highlights:

The compromise allows a debt ceiling increase by as much as $2.4 trillion dollars in total. Included is an immediate increase of $400 billion dollars. President Obama would be permitted to request another $500 billion increase in the coming months, which Congress could vote to disallow by a veto proof two-thirds margin. A further increase of between $1.2 trillion and $1.5 trillion would be available after a Super Committee identifies matching levels of additional spending cuts.

The agreement calls for cuts of more than $900 billion over ten years in spending from programs, agencies and day-to-day spending. It would include security-related and non-security-related cuts. According to the Congressional Budget Office, “discretionary” spending would be decreased by $21 billion in 2012 and $42 billion in 2013.

The agreement creates a 12-person House and Senate special committee to identify further spending cuts. The committee must complete its work by Thanksgiving – November 23 – and Congress must hold an up or down vote on the committee recommendations by December 23. The committee could overhaul the tax code or find savings in benefit programs like Medicaid, Medicare or Social Security. Congress could not modify the committee’s recommendation.

Should the special committee deadlock or should Congress reject the committee’s recommendations, then automatic across-the-board spending cuts of at least $1.2 trillion would go into effect.