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Challenge Could Overwhelm Congressional Super-Committee

Growing budget puts deficit-cutting target at risk

En español | A mere 12 lawmakers start work now on the daunting task of finding 1.5 trillion ways to cut the federal deficit. The outcome of that effort could affect Medicare, taxes, social service programs and other federal spending of interest to older Americans.

See also: Protect health and retirement security for all Americans.

The dozen members of the new Joint Select Committee on Deficit Reduction — dubbed the super-committee — are charged with trimming the projected federal budget gap by $1.5 trillion by Thanksgiving through some combination of raising taxes, changing entitlements like Social Security and Medicare and cutting spending programs.

"I'm scared to death of future cuts having catastrophic consequences for older Americans," says AARP senior lobbyist Tim Gearan. "It has a real impact."

The mood in Washington ranges from optimism that the committee will cut the deficit because of the pressure from bondholders and financial markets, to pessimism that Congress won't fulfill the debt-cutting promises it has made no matter what the super-committee does.

Taxes are on the table

One option on the table is to reform the nation's income and corporate tax codes. But the process of eliminating tax breaks in exchange for lowering the overall rate — something both parties are interested in — is time-consuming and complicated, says Bill Frenzel of the Brookings Institution, a former top Republican on the House Budget Committee.

Robert Bixby, head of the Concord Coalition, a nonpartisan organization that advocates for a reduced federal deficit, says a lot of groundwork has been laid. "It's not as if they haven't been thinking about this."

Michael Franc, vice president of government studies at the Heritage Foundation, says it's possible that a major tax change could come out of the committee. Getting rid of tax breaks in exchange for lower overall rates could spur the economy, he says. "Of all the big issues facing the committee, the one that garners the most bipartisan support is on tax reform," Franc says. "If the dynamic seems to be right, you can cobble together a very ambitious tax reform proposal."

Cutting entitlement programs like Social Security and Medicare gets less bipartisan support. Supporters of the programs say they shouldn't be swept into the larger debt debate, and their long-term problems should be solved separately. But others disagree.

"Something has to give with the entitlement programs. It's the 800-pound gorilla in the room. They are the programs that are unsustainable," says Tad DeHaven, budget analyst at the Cato Institute, a libertarian think tank.

Franc wonders whether the Standard & Poor's downgrade will be the fire that's needed to really tackle Social Security, Medicare and Medicaid — the big programs whose growth he sees as a major factor in the long-term debt. Debates about changing retirement programs have usually assumed that changes to those programs would exempt people 55 and older because they are close to retirement age. But Franc says it's time to make changes to that age group, too, because exempting those boomers would mean not enough could be shaved from the deficit.

Next: Six Democrats, six Republicans, one big job. >>

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