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A memo from Democratic staff outlining options for deep cuts to Medicare and Medicaid as well as tax increases on high earners raised eyebrows Wednesday ahead of the first meeting of the joint committee tasked with addressing the deficit.
The memo, which aides cautioned was a summary of options and not formal recommendations, detailed hundreds of billions of dollars in potential reductions in the rate of growth in Medicare and Medicaid, including $124 billion in savings from raising the Medicare eligibility age to 67.
Raising the Medicare age was something that President Barack Obama put on the table as part of his “grand bargain” talks with Speaker John Boehner (R-Ohio) earlier this year, but that deal fell apart in a dispute over taxes.
Numerous other proposed savings are also discussed in the memo, including a $120 billion reduction in payments to drug companies, higher costs for seniors and cuts in payments to providers.
“All are staff-prepared provisions to make Members aware of what has been discussed,” a Democratic aide said of the memo, which draws from debt discussions led by Vice President Joseph Biden, proposals from House Majority Leader Eric Cantor (R-Va.), and last year’s bicameral deficit commission led by former Sen. Alan Simpson (R-Wyo.) and former White House Chief of Staff Erskine Bowles.
The memo also details the potential for assorted tax increases on high-income earners, hedge fund managers, oil companies, some multinational corporations and corporate jet owners. Some of the higher revenue could be diverted to a “Make It in America” tax cut.
“Members have not discussed these documents,” Ways and Means Committee spokesman Josh Drobnyk said in an email after the document was leaked to the media. “Staff has prepared for review multiple revenue provisions that may come under consideration for a balanced approach to job creation, tax reform and deficit reduction as well as an analysis of changes to entitlement programs that have been proposed by others during previous negotiations this year.”
The Joint Committee on Deficit Reduction will meet Thursday for an organizational meeting and again next Tuesday for its first hearing. The committee of 12 members is tasked with trimming at least $1.2 trillion in federal spending to avoid triggering automatic cuts starting in 2013.