Brace yourself. The proposed Senate tax bill would force $25 billion in Medicare cuts in 2018 and maybe more in the future because it would trigger a rule called Pay-As-You-Go or PAYGO. The rule requires mandatory Medicare cuts and cuts to other programs when new legislation raises the deficit. The Senate plan adds $1.5 trillion to the deficit and so if it becomes law, Medicare will suffer.
The Congressional Budget Office (CBO) lays out the gory details in a letter to Democratic House Whip Steny Hoyer. The CBO points out that the PAYGO limits Medicare cuts to four percent, but that’s still a $25 billion cut.
Social Security, Medicaid and Food Stamps are exempt from PAYGO. But other programs are not. And raising the deficit with the tax bill means other programs, including student loans and farm subsidies, will also suffer.
While Congress pushes ahead with a tax cut plan that will benefit rich people, even conservative think tanks and some rich people urge against it. Deficit hawks like those at the Peter G. Peterson Foundation say, “Tax reform should grow the economy, not the debt.”
The Economic Policy Institute, which studies policy aimed at helping low and middle income workers, points out that the top 1 percent will benefit with a $32,500 tax cut but the bottom 20 percent will pay $10 more. Its report says that while 20 percent of people in the middle will get a tax cut, 66 percent of them will get a tax increase in 2027.
More than 400 millionaires and billionaires wrote to Congress to ask lawmakers not to cut their taxes. Under the umbrella of the Center for Responsible Wealth, the signers said, “We believe the key to creating more good jobs and a strong economy is not tax breaks for those of us who have plenty, but investing in the American people. Our civic institutions that help people meet basic living standards and protect the climate are critical to supporting our prosperity as a nation.”
The signers of the letter include: Rockefeller Brothers Fund chair Steven Rockefeller, financier George Soros, filmmaker Abigail Disney, former American Airlines CEO Robert L. Crandall, Seventh Generation founder Jeffrey Hollender, Hanna Andersson founder Gun Denhart, former Stride Rite CEO Arnold Hiatt, film producer Sarah Pillsbury, clothing retailer Eileen Fisher, and former US Labor Secretary Robert Reich.
If you don’t like what Congress is doing, let your Senators and Representatives know. Here’s how:
Call the U.S. Capitol switchboard at (202) 224-3121and ask for them. You can find your U.S. Representative here.
And your U.S. Senators here.
