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Federal Deficit Reduction
Federal Deficit Reduction
Last Updated: 11/22/2011
The Latest: The co-chairs of the deficit reduction “super committee” announced that the committee has failed to come to an agreement on a deficit reduction strategy. The bipartisan 12-member committee was created by the Budget Control Act to craft a plan by November 23 to reduce the national deficit by at least $1.2 trillion. The committee’s failure to reach an agreement means that automatic spending cuts totaling $1.2 trillion will take effect during January 2013, which includes reductions in Medicare payments to hospitals and other providers of 2 percent over nine years (2013 to 2021). Additional information is available in HAP Memo 11-122 . Background: The President signed legislation to raise the nation’s debt ceiling and reduce the deficit. The measure raises the debt ceiling by $900 billion ($400 billion immediately and $500 billion during September following a presidential request) and enacts cuts of $917 billion over ten years. While Medicare and Medicaid would not be impacted by the initial cuts, the legislation tasks a 12-member, bipartisan Congressional committee with recommending $1.2-1.5 trillion in additional savings by November 23. Congress must vote on the recommendations by December 23, and the President could request an additional increase in the debt ceiling of $1.5 trillion if passed. If Congress fails to act on the committee’s proposal or send a balanced budget amendment to the states before the end of the year, the bill would automatically trigger across-the-board cuts totaling $1.2 trillion in mandatory and discretionary spending beginning during 2013. Medicaid would not be subject to the cuts, but Medicare provider payments would face a cut of no more than 2 percent over nine years (2013-2021). The President would then be authorized to request an additional increase in the debt ceiling of $1.2 trillion. Additional information is available in HAP Memo 11-71. Additional Information:
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