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Latest Debt Plan Targets Social Security, Medicare

Advocates for seniors critical of 'Gang of Six' proposal

Long-term care plan under fire

The plan targets for extinction a new program that allows workers to buy long-term care insurance. That program, called the CLASS Act, is part of Obama's health care overhaul. Critics say it will not take in enough in premiums to pay for itself. Fraser called it "Ponzi scheme financing."

Certner says the long-term care insurance program is needed because one in four people is caring for a relative and $450 billion worth of care is unpaid. "We don't want to see it eliminated before it even gets off the ground."

On Medicare and Medicaid, the Gang of Six would ask congressional committees to cut about $500 billion in spending. That's in addition to a similar size reduction mandated by the health reform law. "To achieve that level would be extremely difficult without massive cost shifting or reducing access" to medical care, Certner says.

But Fraser says the Gang of Six approach doesn't move fast enough to stem the growing costs of Medicare and Medicaid.

"They're unaffordable. If we don't start reforming them today, the solutions are going to be very, very harsh," Fraser says.

Along with cuts to health programs, defense spending and other federal programs would be reduced, with caps established. Congressional committees would be left to decide on what programs are eliminated or reduced.

Fraser says she's worried there won't be enough cuts and that the bill will lead to higher taxes and raising the debt ceiling without getting long-term government spending under control. Wall Street financial markets, she says, have made it clear that the nation needs to get its debt load down as a percentage of the economy.

Taxes are flash point

The plan is notable for drawing some Republican support even though it solves part of the debt problem by raising tax revenues, not just cutting spending. Rep. Frank Wolf, R-Va., for instance, urged House leaders to bring it to a vote. He called it "bitter medicine" that could "restore our fiscal health." And even House Majority Leader Eric Cantor, R-Va., said that although he doesn't favor tax hikes, the Gang of Six plan "does seem to include some constructive ideas to deal with our debt."

But a large bloc of House Republicans has vowed not to support anything that includes higher taxes. The issue has became a flash point.

"Should the Gang of Six plan pass, those fake 'conservatives' who supported it will walk the plank. That's a promise," said Brent Bozell, a conservative activist.

Next: What happens if debt ceiling isn't raised? >>

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