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Letter Urging Senate to Vote Against Tax Legislation That Would Cut Benefits

November 28, 2017

United States Senate
Washington, DC  20510

Dear Senator:

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 tax legislation approved by the Finance Committee that would result in cuts to Medicare, and inevitably Medicaid and Social Security.

Tax Bill Results in Immediate $25 Billion Cut in Medicare Spending

The Fiscal Year 2018 Budget Resolution allows $1.5 trillion of the nearly $6 trillion tax bill not to be offset. Since this legislation would increase the budget deficit by over $1.5 trillion, the Congressional Budget Office has written that the tax bill 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 Senate to waive the tax bill’s impact on the PAYGO scorecard.  Without including a waiver in this legislation, 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.

Repealing the Individual Mandate Undermines Health Security, Particularly for Older Adults

In addition, the committee-passed bill would undermine the health security of seniors not yet eligible for Medicare by repealing the Affordable Care Act’s (ACA) individual mandate.  That would raise ACA marketplace plan premiums for older adults age 50-64 by an average of $1,500 in 2019, destabilize the individual health insurance market – prompting some insurance carriers to stop offering coverage – and, according to the CBO, increase the number of uninsured by 13 million people.

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 the Senate tax bill 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

The Senate tax bill 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 Senators 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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