"Gang of Six" plan is another Washington punt 

Today, Washington was abuzz with the of the “Gang of Six” deficit-reduction plan, which received a boost when Sen. Tom Coburn, R-Okla., decided to rejoin the bipartisan group of Senators he had previously left in May.

Though it’s being billed as a $3.7 trillion deficit-reduction package, based on the limited details we have, it looks like it defers the actual tough decisions to a later date.

The plan claims just $500 billion in “immediate deficit savings,” but even these don’t seem all that immediate. Here’s what’s included as “immediate”:

 -- Statutory spending caps through 2015. But that still leaves the actual cuts to be determined.

-- “(N)umerous budget process reforms.” Again, that’s not an actual cut.

-- “Shift to the chained-CPI (a more accurate measure of inflation) government-wide starting in 2012, along with the following specifications for Social Security: (1) exempt SSI from the shift for five years, and then phase in the shift over the next five years; and (2) provide a minimum benefit equal to 125% of the poverty line for five years.”

In other words, let some future Congress can fight it out with AARP in 2017 when it comes times to actually implement this change.

-- “Repeal the CLASS Act.” For the unacquainted, this is a new long-term care insurance entitlement created within the national health care law. Since the program collects premiums before it actually starts paying out benefits, it produces projected surpluses at first, which turn into deficits later. It should undoubtedly be repealed, though, technically speaking, the way the accounting works, repealing the program won’t reduce short-term deficits (and actually will increase them).

-- “Enact concrete policy changes that lock-in additional savings, including freezing Congressional pay and selling unused federal property.” These actions could be used to reduce the deficit, though likely only marginally.

-- “Require GAO and the Department of Labor to report to Congress on establishing a more effective unemployment insurance trigger.” Okay, so this requires other parts of the government to issue a report. How does that represent “immediate” deficit cuts?

As I noted, these are only the reforms that make up the theoretical $500 billion in “immediate” cuts.

The rest of the cuts are even more tenuous.

For instance, the plan would “Require committees to report legislation within six months that would deliver real deficit savings in entitlement programs over 10 years.” Here’s an example of one of the specific requirements: “Health, Education, Labor, and Pensions would find $70 billion.”

In theory, if committees did not meet the requirements detailed in the proposal, it would mean across the board spending cuts. But, to put it charitably, it remains an open question as to whether this would actually happen.

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Philip Klein

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