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Letter Opposing PAYGO Cut to Medicare in GOP Tax Bill

November 15, 2017

United States House of Representatives
Washington, DC  20515

Dear Representative:

On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare, I am writing to urge you to vote against H.R. 1, legislation that would result in cuts to Medicare, Medicaid and Social Security – all to pay for massive tax breaks for the very wealthy and profitable corporations.

H.R. 1 Results in Immediate $25 Billion Cut in Medicare Spending

The final budget resolution passed by the House of Representatives on October 26th allows $1.5 trillion of the $5.753 trillion tax bill not to be offset. According to the November 14th letter sent by Congressional Budget Office Director Keith Hall to Democratic Whip Steny Hoyer, this legislation that would increase the budget deficit by over $1.5 trillion would trigger $136 billion in automatic spending cuts to mandatory programs in the current fiscal year, including a $25 billion reduction to Medicare, as required by the Statutory Pay-As-You-Go Act of 2010 (PAYGO).  At a minimum, the National Committee urges the House to waive H.R. 1’s impact on the PAYGO scorecard.  Without including a waiver in H.R. 1, a vote for the tax bill is a vote for an immediate $25 billon cut in Medicare spending.

Exploding the Budget Deficit Will Lead to Middle-Class Benefit Cuts

However, even if PAYGO is waived, this legislation would leave Medicare, Medicaid and Social Security vulnerable to benefit cuts because of its dramatic increase in the public debt – an increase that will have to be offset in the future.  Inevitably, older Americans and people with disabilities will be forced to pay a heavy price for this irresponsible legislation.

Making Seniors Pay More for Health Care and Reducing Access to Long-Term Care

Medicare beneficiaries cannot afford to pay more for less coverage – particularly when half of them have incomes of less than $26,200 a year and spend 25 percent of their Social Security check to pay for Medicare Parts B and D out-of-pocket costs for premiums and cost-sharing amounts.

Regarding Medicaid, middle-class Americans often rely on the program for long-term services and supports when they exhaust their savings.  Nearly two-thirds of all nursing home residents’ care is financed in whole or in part by Medicaid.  In addition, Medicaid provides home and community-based services that allow seniors to stay in their homes.  The fiscal crisis created by the tax bill is likely to result in a trillion-dollar cut to Medicaid that will limit seniors’ access to long-term care services.

In addition, H.R. 1 guts important deductions and tax incentives currently used by middle-class families, including the repeal of the medical expense deduction.  Presently, the medical deduction allows individuals to deduct the costs of very high out-of-pocket health care and/or long-term care costs.  The bill repeals that provision.  About three-quarters of the 8.8 million taxpayers who claim the medical expense deduction are 50 or older, and more than 70 percent have incomes $75,000 or below.

Chained CPI Hikes Taxes and Makes Social Security Vulnerable to COLA Cuts

The National Committee also opposes a provision in the committee-passed bill that would move to a "chained" Consumer Price Index (CPI) to calculate increases in tax brackets and the standard deduction.  Currently, the Consumer Price Index for All Urban Consumers (CPI-U) is used to index the standard deduction and tax brackets.  Historically, the chained CPI has increased more slowly than the CPI-U.  Using the chained CPI – instead of the CPI-U – to slow the growth of tax deductions and brackets would result in higher taxes for all Americans, including seniors.

What’s more, if H.R. 1 requires that the chained CPI be used to index increases in tax brackets and deductions, supporters of cutting Social Security are likely to demand that the chained CPI is also used to determine Social Security cost-of-living adjustments (COLA).   As a result, the Social Security COLAs of current and future beneficiaries would be cut.  According to the Chief Actuary of the Social Security Administration, three years after becoming law, calculating the COLA based on the chained CPI would decrease Social Security benefits by about $130 per year (0.9 percent) for a typical 65-year old. By the time that senior reaches 95, the annual benefit cut would be almost $1,400, a 9.2 percent reduction from currently scheduled benefits.

Oppose Tax Bill

 

H.R. 1 will result in an immediate $25 billion cut in Medicare spending and will inevitably lead to the unraveling of working and middle-class programs to pay for massive tax cuts for the very wealthy and profitable corporations.  That’s why the National Committee urges all Representatives to oppose this “Robin Hood-in-Reverse” tax bill and instead work together to protect the retirement and health security commitments made to generations of Americans.

 

Sincerely,

Max Richtman
President and CEO



   

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