Democrats proposed a budget cut of up to $3 trillion that would affect long-term spending like Medicare. They also propose to increase taxes of up to $1.5 trillion to help aid the country’s financial troubles that may increase the national debt. Republicans, however, resist the proposal which they say is not serious. The November 2012 congressional and presidential elections could be dividing the two parties over taxes.
The proposal was presented during a meeting with a special congressional panel tasked to cut U.S. budget deficit by $1.2 trillion in 10 years. The first meeting happened on September 8 and by November 23, their deadline, a report is expected by Congress. The plan presented by the Democrats is to cut the deficit by $2.5-$3 trillion. They also presented a spending stimulus of $200 to $300 to aid the country’s sagging economy and to be paid with lower interest payments from reducing deficits. About $400 billion in Medicare savings through benefit and healthcare provider cuts. Additionally, they also seek $100 billion cuts in Medicaid healthcare program for the poor.
Republicans’ committee made no comment on the Democrats’ plan but reportedly, Republican Senator Jon Kyl said the Democratic plan contained too much revenues. Kyl said they have not signed off on any revenues and that they are not doing anything that high. Republicans also seek a ‘territorial system’ tax exemption of up to 95% for offshore corporations’ revenues.
Rating agencies monitor how the budget deficit that goes up to $1 trillion yearly may be solved. According to one healthcare lobbyist, that the Democrats’ perspective to put some markers down and look like they’re serious about deficit reduction is smart, because there are two games in town: reduce the deficit and avoid the blame. Without arriving at a deal, an automatic spending cuts will happen beginning 2013 according to the budget deal reached in summer between the two parties. This means an automatic 2% a year cut to Medicare amounting to about $123 billion in spending cuts until 2021.
Not all Democrats are in favor of the proposed Democratic plan. Representative James Clyburn and some Liberal House Democrats are doubtful about Medicare spending cuts. A congressional aide described the Democratic plan as something similar to that of Obama’s faltered proposal to House Speaker John Boehner because Republicans balked at the prospect of raised taxes. The end agreement was a smaller $917 billion deficit-reduction package. It helped increased America’s borrowing authority which prevented a default. To this, Standard & Poor was unimpressed especially by the reduced U.S. AAA rating by one notch in August. According to rating agencies, Washington has saved a total of $4 trillion, including the August agreed amount which is outside the $1.2 trillion minimum the super committee is directed to obtain by November 23.