Co-Chairs' ProposalHighlights: * Achieves nearly $4 trillion in deficit reduction through 2020: 50 specific ways to cut outdated programs and strengthen competitiveness by making Washington cut and invest, not borrow and spend. * Reduces the deficit to 2.2% of GDP by 2015, exceeding President’s goal of primary balance (about 3% of GDP). * Reduces tax rates, abolishes the AMT, and cuts backdoor spending in the tax code. * Caps revenue at or below 21% of GDP and gets spending down to 22% and eventually to 21%. * Stabilizes debt by 2014 and reduces debt to 60% of GDP by 2024 and 40% by 2037. * Ensures lasting Social Security solvency, prevents projected 22% cuts in 2037, reduces elderly poverty, and distributes burden fairly.National Commission on Fiscal Responsibility and ReformNCFRR_6c1a9f74-edd7-11df-a5c7-1a187a64ea2aPresident Obama created the bipartisan National Commission on Fiscal Responsibility and Reform to address our nation's fiscal challenges. The Commission is charged with identifying policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. Specifically, the Commission shall propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. In addition, the Commission shall propose recommendations that meaningfully improve the long-run fiscal outlook, including changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal Government.Sen. Alan SimpsonCo-Chair, Former Republican Senator from Wyoming.Erskine BowlesCo-Chair, Chief of Staff to President ClintonDiscretionary Working GroupThe Discretionary Working Group will research and discuss issues related to discretionary spending. Discussion leaders: Rep. Spratt and Sen. Coburn Members: Sen. Coburn Dave Cote Sen. Durbin Ann Fudge Rep. Hensarling Alice Rivlin Rep. Ryan Rep. Schakowsky Rep. SprattMandatory Working GroupThe Mandatory Working Group will research and discuss issues related to mandatory spending. Discussion leaders: Alice Rivlin and Sen. Gregg (on Social Security) or Rep. Ryan (on other mandatory issues) Members: Sen. Baucus Rep. Becerra Rep. Camp Sen. Coburn Sen. Conrad Sen. Crapo Sen. Gregg Rep. Hensarling Alice Rivlin Rep. Ryan Rep. Schakowsky Rep. Spratt Andy SternTax Reform Working GroupThe Tax Reform Working Group will research and discuss issues related to tax reform. Discussion Leaders: Rep. Camp and Sen. Conrad Members: Sen. Baucus Rep. Becerra Rep. Camp Sen. Conrad Dave Cote Sen. Crapo Sen. Durbin Ann Fudge Sen. Gregg Andy Stern_6c1aa776-edd7-11df-a5c7-1a187a64ea2a_6c1aaa14-edd7-11df-a5c7-1a187a64ea2aPatriotic DutyWe have a patriotic duty to come together on a plan that will make America better off tomorrow than it is today * America cannot be great if we go broke.Our economy will not grow and our country will not be able to compete without a plan to get this crushing debt burden off our back. * Throughout our history, Americans have always been willing to sacrifice to make our nation stronger over the long haul. That’s the promise of America:to give our children and grandchildren a better life. * American families have spent the past 2 years making tough choices in their own lives. They expect us to do the same. The American people are counting on us to put politics aside, pull together not pull apart, and agree on a plan to live within our means and make America strong for the long haul.Leadership, Comprehensiveness, and Shared SacrificeThe Problem Is Real –the Solution Is Painful –There’s No Easy Way Out –Everything Must Be On the Table –and Washington Must Lead * We must stabilize then reduce the national debt, or we could spend $1 trillion a year in interest alone by 2020. * A sensible, real plan requires shared sacrifice –and Washington should lead the way and tighten its belt.Truthfulness and Tough ChoicesIt Is Cruelly Wrong to Make Promises We Can’t Keep * Our country has tough choices to make. Without regard to party, we need to be willing to tell Americans the truth.Economic RecoveryDon’t Disrupt a Fragile Economic Recovery * Start gradually; begin cuts in FY 2012.Focused Safety NetProtect the Truly Disadvantaged * Focus benefits on those who need them. * Ensure an affordable and sustainable safety net.Economic Growth and CompetitivenessCut and Invest to Promote Economic Growth and Keep America Competitive * Cut red tape and inefficient spending that puts a drag on the economy and job creation. * Invest in education, infrastructure, and high-value R&D.Spending ReductionCut Spending We Simply Can’t Afford, Wherever We Find It * End redundant, antiquated, ineffective spending. * Cut ALL excess spending – defense spending, domestic discretionary spending, entitlement spending, & spending in the tax code. * Keep America safe, while rethinking our 21st century global role. * Bring spending down to 22% and eventually 21% of GDP.Productivity and EffectivenessDemand Productivity and Effectiveness * Use fiscal restraint to promote savings through reforms and efficiencies that force government to produce better results. * Set goal of 3% annual productivity growth in public sector.Tax Reform and SimplificationReform and Simplify the Tax Code * Broaden base, lower rates, and bring down the deficit. * Make America the best place to start and run a business and create jobs. * Cap revenue at or below 21% of GDP.Long-Term SoundnessKeep America Sound Over the Long Run * Ensure Social Security’s soundness and solvency. * Reduce the long-term growth of health care costs. * Reduce the debt burden as a share of GDP.Spending CapsEnact tough discretionary spending caps and provide $200 billion in illustrative domestic and defense savings in 2015._6c1aab90-edd7-11df-a5c7-1a187a64ea2a1Recommendations on how to apply the caps: * Cap applied equally with firewall separating defense and non-defense (or security and non-security), and no borrowing across categories through 2015. New Congress will renegotiate firewalls beyond 2015. * 60-vote point of order to enforce caps in Senate; separate non-amendable vote on point of order to enforce cap in House; sequester applied if caps are exceeded. * Budget for disaster funds; tougher limits, transparency for emergencies. * Tighter definition and rules for Overseas Contingency Operations funding (outside cap). * Move Transportation Trust Fund spending to mandatory, limit transportation spending to existing revenue collections and prohibit general fund bailouts of transportation trust funds. * Establish bipartisan Cut-and-Invest Committee to de-authorize outdated, low-priority and inefficient programs and recommend high priority long-term investments. * Change to biennial budgeting.Fiscal DisciplineSpending Caps to Force Fiscal Discipline_6c1aad2a-edd7-11df-a5c7-1a187a64ea2a1.1Choices and AccountabilityRestore fiscal discipline through spending caps that require us to make choices, live within our means, and hold government accountable for results_6c1aaec4-edd7-11df-a5c7-1a187a64ea2a1.1.1EnforcementEnforce discretionary caps_6c1ab07c-edd7-11df-a5c7-1a187a64ea2a1.1.2Points of OrderEnforce discretionary caps with a point of order against legislation approving excess spending_6c1ab25c-edd7-11df-a5c7-1a187a64ea2a1.1.2.1SequesterEnforce discretionary caps with a sequester that is triggered at end of session if final appropriations are above the cap_6c1ab41e-edd7-11df-a5c7-1a187a64ea2a1.1.2.2Discretionary Spending Caps[Reduce] discretionary spending $204 billion (16%) below the President’s budget and $127 billion (10%) below the CBO baseline in 2015_6c1ab5ea-edd7-11df-a5c7-1a187a64ea2a1.2Roll-BackRoll discretionary spending back to FY2010 levels for FY2012, requires 1% cut in discretionary budget authority every year from FY2013 though 2015_6c1ab7ca-edd7-11df-a5c7-1a187a64ea2a1.2.1IndexingIndex discretionary Budget Authority (BA) to inflation from FY 2015 through FY2020_6c1ab9a0-edd7-11df-a5c7-1a187a64ea2a1.2.2Illustrative CutsIllustrative Discretionary Cuts_6c1abb62-edd7-11df-a5c7-1a187a64ea2a1.3Priorities_6c1abd2e-edd7-11df-a5c7-1a187a64ea2a1.3.1Leadership by ExampleLead by example_6c1abf22-edd7-11df-a5c7-1a187a64ea2a1.3.1.1Responsibility begins at the topSpendingReturn spending to pre-crisis levels_6c1ac10c-edd7-11df-a5c7-1a187a64ea2a1.3.1.2Key InvestmentsProtect key investments in infrastructure, education, R&D_6c1ac6c0-edd7-11df-a5c7-1a187a64ea2a1.3.1.32015 Cuts[Achieve] $200 Billion in Illustrative Spending Cuts in 2015_6c1ac972-edd7-11df-a5c7-1a187a64ea2a1.3.1.4* More than 50 examples of how to meet 2015 target * $100 billion in potential Defense savings * $100 billion in potential Domestic savings * Cuts spending $200 billion below the 2015 levels in the President’s BudgetDefense Cuts[Achieve] $100B in Illustrative Defense Cuts_6c1acb84-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.1Overhead SavingsApply the overhead savings Secretary Gates has promised to deficit reduction [to save] $28 billion_6c1acda0-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.1.1Salaries, Bonuses, and Other CompensationFreeze federal salaries, bonuses, and other compensation at the Department of Defense for three years [to save] $5.3 billion_6c1acfa8-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.1.2Noncombat Military PayFreeze noncombat military pay at 2011 levels for 3 years [to save] $9.2 billion_6c1ad278-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.1.3Defense ContractingDouble Secretary Gates’ cuts to defense contracting [to save] $5.4 billion_6c1ad49e-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.1.4ProcurementReduce procurement by 15 percent [to save] $20 billion_6c1ad6ba-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.1.5Overseas BasesReduce overseas bases by one-third [to save] $8.5 billion_6c1ad8ea-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.1.6TricareModernize Tricare, Defense health [to save] $6 billion_6c1adb1a-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.1.7Commercial ActivitiesReplace military personnel performing commercial activities with civilians [to save] $5.4 billion_6c1add54-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.1.8Research, Development, Test & EvaluationReduce spending on Research, Development, Test & Evaluation by 10 percent [to save] $7 billion_6c1adf8e-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.1.9Base SupportReduce spending on base support [to save] $2 billion_6c1ae1d2-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.1.10Facilities MaintenanceReduce spending on facilities maintenance [to save] $1.4 billion_6c1ae45c-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.1.11Retail ActivitiesConsolidate the Department of Defense’s retail activities [to save] $0.8 billion_6c1ae6c8-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.1.12Local SchoolsIntegrate children of military personnel into local schools in the United States [to save] $1.1 billion_6c1aeab0-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.1.13Domestic Cuts[Achieve] $100B in Illustrative Domestic Cuts_6c1aedf8-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.2Congressional & White House BudgetsReduce Congressional & White House budgets by 15% [to save] $0.8 billion_6c1af0a0-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.2.1Salaries, Bonuses, and Other CompensationFreeze federal salaries, bonuses, and other compensation at non-Defense agencies for three years [to save] $15.1 billion_6c1af32a-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.2.2Federal WorkforceCut the federal workforce by 10% (2-for-3 replacement rate) [to save] $13.2 billion_6c1af5dc-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.2.3ContractorsEliminate 250,000 non-defense service and staff augmentee contractors [to save] $18.4 billion_6c1af9ec-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.2.4PrintingReduce unnecessary printing costs [to save] $0.4 billion_6c1afc94-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.2.5Cut-and-Invest CommitteeCreate a Cut-and-Invest Committee charged with trimming waste and targeting investment [to save] $11 billion_6c1aff32-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.2.6Corps Construction ProjectsTerminate low-priority Corps construction projects [to save] $1 billion_6c1b01f8-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.2.7Foreign AidSlow the growth of foreign aid [to save] $4.6 billion_6c1b04be-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.2.8Rural Utility ServiceEliminate a number of programs administered by the Rural Utility Service (formerlyREA) [to save] $0.5 billion_6c1b0798-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.2.9Rural Utility ServiceEarmarksEliminate all earmarks [to save] $16 billion_6c1b0a72-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.2.10Commercial SpaceflightEliminate funding for commercial spaceflight [to save] $1.2 billion_6c1b0d42-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.2.11Excess PropertySell excess federal property [to save] $1 billion_6c1b1026-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.2.12Other Options[Adopt] 26 other options of $2 billion or less [to save] $17 billion_6c1b1346-edd7-11df-a5c7-1a187a64ea2a1.3.1.4.2.13Tax ReformPass tax reform that dramatically reduces rates, simplifies the code, broadens the base, and reduces the deficit._6c1b1620-edd7-11df-a5c7-1a187a64ea2a2TaxpayersRatesLower Rates_6c1b1904-edd7-11df-a5c7-1a187a64ea2a2.1SimplificationSimplify the Code_6c1b1da0-edd7-11df-a5c7-1a187a64ea2a2.2BreadthBroaden the Base_6c1b2250-edd7-11df-a5c7-1a187a64ea2a2.3Tax ExpendituresCut Spending in the Tax Code (Tax Expenditures)_6c1b2584-edd7-11df-a5c7-1a187a64ea2a2.4ComplianceImprove Compliance (Tax Gap)_6c1b28ae-edd7-11df-a5c7-1a187a64ea2a2.5Business ClimateMake America the Best Place in the World to Start and Grow a Business_6c1b2b92-edd7-11df-a5c7-1a187a64ea2a2.6DeficitReduce the Deficit_6c1b2e9e-edd7-11df-a5c7-1a187a64ea2a2.7Zero Plan[Consider] Option 1: The Zero Plan_6c1b31c8-edd7-11df-a5c7-1a187a64ea2a2.8Rate ConsolidationConsolidate the tax code into three individual rates and one corporate rate_6c1b34f2-edd7-11df-a5c7-1a187a64ea2a2.8.1AMT, Pease, and PEPEliminate the AMT, Pease, and PEP_6c1b3826-edd7-11df-a5c7-1a187a64ea2a2.8.2Tax ExpendituresEliminate all $1.1 trillion of tax expenditures_6c1b3b6e-edd7-11df-a5c7-1a187a64ea2a2.8.3Deficit Reduction and Marginal RatesDedicate a portion of savings to deficit reduction and apply the rest to reduce all marginal tax rates_6c1b3ea2-edd7-11df-a5c7-1a187a64ea2a2.8.4Desired Tax ExpendituresAdd back in any desired tax expenditures, and pay for them by increasing one or all of the rates from their zero-expenditure low_6c1b41c2-edd7-11df-a5c7-1a187a64ea2a2.8.5Wyden-Gregg Style Reform[Consider] Option 2: Wyden-Gregg Style Reform_6c1b4bb8-edd7-11df-a5c7-1a187a64ea2a2.9Individual Tax Reform_6c1b50fe-edd7-11df-a5c7-1a187a64ea2a2.9.1AMT, PEP, and PeaseRepeal AMT, PEP, and Pease_6c1b546e-edd7-11df-a5c7-1a187a64ea2a2.9.1.1Three RatesEstablish 3 rates –15%, 25% and 35%_6c1b59a0-edd7-11df-a5c7-1a187a64ea2a2.9.1.2Standard DeductionTriple standard deduction to $30,000 ($15,000 for individuals)_6c1b5dc4-edd7-11df-a5c7-1a187a64ea2a2.9.1.3DeductionsRepeal state & local tax deduction, cafeteria plans, and miscellaneous itemized deductions_6c1b615c-edd7-11df-a5c7-1a187a64ea2a2.9.1.4Mortgage DeductionLimit mortgage deduction to exclude 2nd residences, home equity loans, and mortgages over $500,000_6c1b64f4-edd7-11df-a5c7-1a187a64ea2a2.9.1.5Charitable DeductionLimit charitable deduction with floor at 2% of AGI_6c1b6878-edd7-11df-a5c7-1a187a64ea2a2.9.1.6Employer-Provided HealthcareCap income tax exclusion for employer-provided healthcare at the amount of the actuarial value of FEHBP standard option_6c1b6c06-edd7-11df-a5c7-1a187a64ea2a2.9.1.7Other Tax ExpendituresModify and repeal several other tax expenditures_6c1b707a-edd7-11df-a5c7-1a187a64ea2a2.9.1.8Deficit ReductionDedicate portion of savings to deficit reduction_6c1b7408-edd7-11df-a5c7-1a187a64ea2a2.9.1.9Corporate TaxCorporate tax reform_6c1b77aa-edd7-11df-a5c7-1a187a64ea2a2.9.2Corporate Tax RateReduce corporate tax rate to 26%_6c1b7b2e-edd7-11df-a5c7-1a187a64ea2a2.9.2.1Research CreditPermanently extend the research credit_6c1b7ed0-edd7-11df-a5c7-1a187a64ea2a2.9.2.2Business Tax ExpendituresEliminate and modify several business tax expenditures_6c1b827c-edd7-11df-a5c7-1a187a64ea2a2.9.2.3Domestic Production DeductionEliminate and modify [the] domestic production deduction_6c1b8614-edd7-11df-a5c7-1a187a64ea2a2.9.2.3.1LIFO Method of AccountingEliminate and modify [the] LIFO method of accounting_6c1b89b6-edd7-11df-a5c7-1a187a64ea2a2.9.2.3.2Energy Tax PreferencesEliminate and modify [the] energy tax preferences for the oil and gas industry_6c1b8d58-edd7-11df-a5c7-1a187a64ea2a2.9.2.3.3Depreciation RulesEliminate and modify [the] depreciation rules_6c1b9122-edd7-11df-a5c7-1a187a64ea2a2.9.2.3.4International Tax ReformInternational tax reform including a territorial system_6c1b9582-edd7-11df-a5c7-1a187a64ea2a2.9.2.4Tax Reform Trigger[Consider] Option 3: Tax Reform Trigger_6c1b9a64-edd7-11df-a5c7-1a187a64ea2a2.9.3Finance and Ways & Means Committees and TreasuryCall on Finance and Ways & Means Committees and Treasury to develop and enact comprehensive tax reform by end of 2012_6c1b9e6a-edd7-11df-a5c7-1a187a64ea2a2.9.3.1Across-the-Board “Haircut”Put in place across-the-board “haircut” for itemized deductions, employer health exclusion, and general business credits that would take effect in 2013 if reform is not yet enacted_6c1ba20c-edd7-11df-a5c7-1a187a64ea2a2.9.3.2Individual Deductions and ExclusionsHaircut would limit proportion of deductions and exclusions individuals could take to around 85%* in 2015._6c1ba5ae-edd7-11df-a5c7-1a187a64ea2a2.9.3.2.1Business CreditsSimilarly, corporations would only take some proportion of their general business credits._6c1ba950-edd7-11df-a5c7-1a187a64ea2a2.9.3.2.2Increase Over TimeSet haircut to increase over time until tax reform is enacted_6c1bacf2-edd7-11df-a5c7-1a187a64ea2a2.9.3.2.3Other Revenues_6c1bb094-edd7-11df-a5c7-1a187a64ea2a2.9.4Transportation SpendingGradually increase gas tax to fund transportation spending_6c1bb440-edd7-11df-a5c7-1a187a64ea2a2.9.4.1Gas TaxRaise gas tax gradually by 15¢ beginning in 2013_6c1bb7f6-edd7-11df-a5c7-1a187a64ea2a2.9.4.1.1Transportation Trust FundsDedicate funds toward fully funding the transportation trust funds and therefore eliminating the need for further general fund bailouts_6c1bbc42-edd7-11df-a5c7-1a187a64ea2a2.9.4.1.2Chained CPIBecause the current index overstates inflation, make technical correction to adopt chained CPI government-wide, including the tax code_6c1bc00c-edd7-11df-a5c7-1a187a64ea2a2.9.4.2Doc FixAddress the “Doc Fix” not through deficit spending but through savings from payment reforms, cost-sharing, and malpractice reform, and long-term measures to control health care cost growth._6c1bc3d6-edd7-11df-a5c7-1a187a64ea2a3DoctorsLawyersMedical Insurance CompaniesHealth Care CostsReducing Health Care Costs_6c1bc7a0-edd7-11df-a5c7-1a187a64ea2a3.1Medium TermFully offset the cost of the “Doc Fix” by asking doctors and other health providers, lawyers, and individuals to take responsibility for slowing health care cost growth._6c1bcb7e-edd7-11df-a5c7-1a187a64ea2a3.1.1DoctorsLawyersIndividualsPayments, Efficiency, and QualityPay doctors and other providers less, improve efficiency, and reward quality by speeding up payment reforms and increasing drug rebates_6c1bcf66-edd7-11df-a5c7-1a187a64ea2a3.1.1.1Tort ReformPay lawyers less and reduce the cost of defensive medicine by adopting comprehensive tort reform_6c1bd556-edd7-11df-a5c7-1a187a64ea2a3.1.1.2Medicare Cost-SharingExpand cost-sharing in Medicare to promote informed consumer health choices and spending_6c1bd9f2-edd7-11df-a5c7-1a187a64ea2a3.1.1.3Cost ContainmentExpand successful cost containment demonstrations_6c1bde20-edd7-11df-a5c7-1a187a64ea2a3.1.1.4IPABStrengthen IPAB_6c1be2b2-edd7-11df-a5c7-1a187a64ea2a3.1.1.5Additional Health SavingsRecommend additional health savings (illustrative examples to follow)_6c1be6ae-edd7-11df-a5c7-1a187a64ea2a3.1.1.6Long TermContain growth in total federal health spending to GDP 1% after 2020 by establishing a process to regularly evaluate cost growth, and take additional steps as needed if projected savings do not materialize_6c1beac8-edd7-11df-a5c7-1a187a64ea2a3.1.1.7"Doc Fix"Paying for the “Doc Fix”_6c1beee2-edd7-11df-a5c7-1a187a64ea2a3.1.2Pay, Efficiency, and QualityPay doctors, other health providers, and drug companies less and improve efficiency and quality_6c1bf310-edd7-11df-a5c7-1a187a64ea2a3.1.2.1SGR and CMSReplace cuts required by SGR through 2015 with modest reductions while directing CMS to establish a new payment system, beginning in 2015, to reduce costs and improve quality._6c1bf748-edd7-11df-a5c7-1a187a64ea2a3.1.2.1.1Brand-Name DrugsRequire rebates for brand-name drugs as a condition of participating in Medicare Part D._6c1bfb76-edd7-11df-a5c7-1a187a64ea2a3.1.2.1.2Medicare Cost-SharingIncrease cost-sharing in Medicare_6c1bffb8-edd7-11df-a5c7-1a187a64ea2a3.1.2.2MedigapplansEliminate first-dollar coverage in Medigapplans._6c1c03fa-edd7-11df-a5c7-1a187a64ea2a3.1.2.2.1Deductible, Coinsurance, and CapReplace existing cost-sharing rules with universal deductible, single coinsurance rate, and catastrophic cap for Medicare Part A and Part B._6c1c0832-edd7-11df-a5c7-1a187a64ea2a3.1.2.2.2.Defensive MedicinePay lawyers less and reduce the cost of defensive medicine_6c1c0d0a-edd7-11df-a5c7-1a187a64ea2a3.1.2.3Medical Malpractice LiabilityEnact comprehensive medical malpractice liability reform to cap non-economic and punitive damages and make other changes in tort law._6c1c116a-edd7-11df-a5c7-1a187a64ea2a3.1.2.3.1Beyond the Doc Fix[Achieve] Savings Beyond the Doc Fix_6c1c15c0-edd7-11df-a5c7-1a187a64ea2a3.1.3Cost-ContainmentExpand Successful Cost-Containment Demonstration Projects by 2015_6c1c1a34-edd7-11df-a5c7-1a187a64ea2a3.1.3.1Additional SavingsIdentify an additional $200 billion savings in federal health spending_6c1c1ff2-edd7-11df-a5c7-1a187a64ea2a3.1.3.2IPABStrengthen the Independent Payment Advisory Board (IPAB)_6c1c254c-edd7-11df-a5c7-1a187a64ea2a3.1.3.3Carve-OutsInclude all providers (no carve-outs) and recommendations on benefit design and cost-sharing._6c1c29e8-edd7-11df-a5c7-1a187a64ea2a3.1.3.3.1Savings TargetsImprove savings targets to 1.5% starting in 2015._6c1c2e70-edd7-11df-a5c7-1a187a64ea2a3.1.3.3.2TriggerEliminate the trigger that could turn off IPAB in 2019._6c1c33a2-edd7-11df-a5c7-1a187a64ea2a3.1.3.3.3Target Growth RateAllow cost-savings recommendations even when spending does not exceed the target growth rate._6c1c383e-edd7-11df-a5c7-1a187a64ea2a3.1.3.3.4Reform ProposalsAllow proposals that apply reforms to health plans in the exchange._6c1c3cc6-edd7-11df-a5c7-1a187a64ea2a3.1.3.3.5Congressional Approval or SequesterRequire affirmative Congressional approval of recommendations or alternative savings, with a “back-up sequester” increasing premiums and reducing provider payments if IPAB recommendations (or equivalent savings) are not adopted._6c1c419e-edd7-11df-a5c7-1a187a64ea2a3.1.3.3.6Health Care Savings[Achieve] Illustrative Health Care Savings_6c1c4662-edd7-11df-a5c7-1a187a64ea2a3.1.4Dual-Eligible IndividualsPlace Dual-Eligible Individuals in Medicaid Managed Care [to save] $1 billion by 2015 and $11 billion from 2012-2020_6c1c4b12-edd7-11df-a5c7-1a187a64ea2a3.1.4.1Bad DebtCut Medicare Payments for Bad Debt [to save] $2 billion by 2015 and $15 billion from 2012-2020_6c1c4fe0-edd7-11df-a5c7-1a187a64ea2a3.1.4.2ACOs, Payment Bundling, and Other Payment ReformExpand ACOs, Payment Bundling, and Other Payment Reform (require IPAB to recommend cuts if savings are not realized) [to save] $4 billion by 2015 and $38 billion from 2012-2020_6c1c54c2-edd7-11df-a5c7-1a187a64ea2a3.1.4.3Graduate and Indirect Medical EducationCut Federal Spending on Graduate and Indirect Medical Education [to save] $6 billion by 2015 and $54 billion from 2012-2020_6c1c5a4e-edd7-11df-a5c7-1a187a64ea2a3.1.4.4Medicaid Administrative CostsReduce Federal Spending on Medicaid Administrative Costs [to save] $2 billion by 2015 and $17 billion from 2012-2020_6c1c5f6c-edd7-11df-a5c7-1a187a64ea2a3.1.4.5Medicaid CopaysIncrease Nominal Medicaid Copays [to save] $2 billion by 2015 and $15 Reduce Taxes that States May Levy on Medicaid Providers [to save] $6 billion by 2015 and $49 billion from 2012-2020_6c1c6430-edd7-11df-a5c7-1a187a64ea2a3.1.4.6DSH, Medicare Advantage, and Home HealthAccelerate Phase-in of DSH Payment Cuts, Medicare Advantage Cuts and Home Health Cuts in PPACA [to save] $9 billion by 2015 and $37 billion from 2012-2020_6c1c6a5c-edd7-11df-a5c7-1a187a64ea2a3.1.4.7Tricare for LifeReform Tricare for Life to Increase Cost Sharing for Military Retirees [to save] $5 billion by 2015 and $55 billion from 2012-2020_6c1c6fca-edd7-11df-a5c7-1a187a64ea2a3.1.4.8FEHB Retiree PlansReform FEHB Retiree Plans to Increase Cost Sharing for Federal Civilian Retirees [to save] $1 billion by 2015 and $12 billion from 2012-2020_6c1c74b6-edd7-11df-a5c7-1a187a64ea2a3.1.4.9Health Insurance StandardsEstablish National Standards for Regulating and Administering Health Insurance [to save] $3 billion from 2012-2020_6c1c798e-edd7-11df-a5c7-1a187a64ea2a3.1.4.10Long-Term CareConvert The Federal Share Of Medicaid Payments For Long-Term Care Into a Capped Allotment [to save] $9 billion by 2015 and $89 billion from 2012-2020_6c1c7f06-edd7-11df-a5c7-1a187a64ea2a3.1.4.11Long-Term Savings[Achieve] Long-Term Health Care Savings_6c1c8410-edd7-11df-a5c7-1a187a64ea2a3.1.5Target ExpendituresSet global target for total federal health expenditures after 2020 (Medicare, Medicaid, CHIP, exchange subsidies, employer health exclusion), and review costs every 2 years._6c1c88f2-edd7-11df-a5c7-1a187a64ea2a3.1.5.1Keep growth to GDP 1%.Presidential ProposalsIf costs have grown faster than targets (on average of previous 5 years), require President to submit and Congress to consider reforms to lower spending, such as:_6c1c8de8-edd7-11df-a5c7-1a187a64ea2a3.1.5.2Premiums or Cost-SharingIncrease premiums (or further increase cost-sharing)_6c1c92d4-edd7-11df-a5c7-1a187a64ea2a3.1.5.2.1Fee-for-Service SystemOverhaul the fee-for-service system_6c1c97d4-edd7-11df-a5c7-1a187a64ea2a3.1.5.2.2Medicare PremiumsDevelop a premium support system for Medicare_6c1c9cca-edd7-11df-a5c7-1a187a64ea2a3.1.5.2.3Public Option and/or All-Payer SystemAdd a robust public option and/or all-payer system in the exchange_6c1ca1d4-edd7-11df-a5c7-1a187a64ea2a3.1.5.2.4IPAB ExpansionFurther expand authority of IPAB_6c1ca774-edd7-11df-a5c7-1a187a64ea2a3.1.5.2.5Mandatory SavingsAchieve mandatory savings from farm subsidies, military and civil service retirement._6c1cac9c-edd7-11df-a5c7-1a187a64ea2a4FarmersMembers of the Military ServicesCivil ServantsChained CPIShift to chained CPI for all indexed programs_6c1cb1ce-edd7-11df-a5c7-1a187a64ea2a4.1* Current measures of inflation overestimate increases in cost of living by failing to account for “substitution bias” * Adopting a more accurate measure of inflation would achieve savings government-wideAgricultureReduce farm subsidies by $3 billion per year by reducing direct payments and other subsidies, Conservation Security Program funding, and funding for the Market Access Program_6c1cb70a-edd7-11df-a5c7-1a187a64ea2a4.2Military and Civil Service Retirement[Make changes to] Military and Civil Service Retirement_6c1cbc3c-edd7-11df-a5c7-1a187a64ea2a4.3Highest 5 YearsUse highest 5 years to calculate civil service pensions_6c1cc268-edd7-11df-a5c7-1a187a64ea2a4.3.1Worker ContributionsAsk federal workers to contribute ½ the cost (not 1/14th)_6c1cc81c-edd7-11df-a5c7-1a187a64ea2a4.3.2COLAsReform COLA payments for civilian & military early retirees_6c1ccde4-edd7-11df-a5c7-1a187a64ea2a4.3.3Military RetirementReform military retirement system to vest after 10 years (not 20); defer collection until age 60_6c1cd3ca-edd7-11df-a5c7-1a187a64ea2a4.3.4Universal Services FundReduce spending from Universal Services Fund_6c1cd96a-edd7-11df-a5c7-1a187a64ea2a4.4Student LoansEliminate in-school interest subsidies for student loans_6c1cdeba-edd7-11df-a5c7-1a187a64ea2a4.5Other Mandatory Savings Options[Consider] Other Mandatory Savings Options_6c1ce4a0-edd7-11df-a5c7-1a187a64ea2a4.6Abandoned MinesEnd payments to states and tribes for abandoned mines._6c1cea54-edd7-11df-a5c7-1a187a64ea2a4.6.1Radio Spectrum LicensesExtend FCC’s authority to auction radio spectrum licenses._6c1cefcc-edd7-11df-a5c7-1a187a64ea2a4.6.2Power Marketing AdministrationRestructure Power Marketing Administration to charge market-based rates._6c1cf65c-edd7-11df-a5c7-1a187a64ea2a4.6.3Tennessee Valley AuthorityRequire Tennessee Valley Authority to impose transmission surcharge on electricity sales._6c1cfc2e-edd7-11df-a5c7-1a187a64ea2a4.6.4IRS FeesRequire IRS to deposit fees for its services in Treasury as miscellaneous receipts._6c1d0192-edd7-11df-a5c7-1a187a64ea2a4.6.5Inflation IndexingIndex all fixed-dollar user fees to inflation._6c1d078c-edd7-11df-a5c7-1a187a64ea2a4.6.6Program IntegrityFund program integrity efforts for Medicare, Medicaid, the IRS, and other programs with significant improper payments._6c1d0d54-edd7-11df-a5c7-1a187a64ea2a4.6.7EnforcementEnforcing the Plan to Ensure Deficit Reduction Goals Are Met_6c1d12cc-edd7-11df-a5c7-1a187a64ea2a4.7Annual ReviewReview, annually, whether the budget is on a sustainable path. _6c1d18d0-edd7-11df-a5c7-1a187a64ea2a4.7.1Presidential and Congressional ActionRequire action by the President and Congress if: * Prior to 2015, the budget is projected to be out of primary balance in 2015. * After 2015, if the debt has increased as a percentage of GDP from the prior year._6c1d1f10-edd7-11df-a5c7-1a187a64ea2a4.7.2Required Actions_6c1d24c4-edd7-11df-a5c7-1a187a64ea2a4.7.2.1Presidential RecommendationsIf action is needed: Require President’s budget to include recommendations to stabilize debt path._6c1d2b04-edd7-11df-a5c7-1a187a64ea2a4.7.2.1.1Congressional Budget ResolutionIf action is needed: Require Congressional budget resolution to contain similar measures and offer reconciliation instructions to reduce mandatory spending, increase revenues, and/or modify the discretionary spending limits. * Establish point of order against legislation that increases spending or reduces revenues if Congress fails to pass a budget resolution that eliminates the shortfall._6c1d30ea-edd7-11df-a5c7-1a187a64ea2a4.7.2.1.2Legislative Points of OrderIf action is needed: Establish point of order against legislation that increases spending or reduces revenues if Congress fails to pass a budget resolution that eliminates the shortfall._6c1d3694-edd7-11df-a5c7-1a187a64ea2a4.7.2.1.3WaiversAllow Congress and the President to waive the requirements during years with low economic growth, unanticipated military conflict, or major disaster._6c1d3cd4-edd7-11df-a5c7-1a187a64ea2a4.7.2.2Social SecurityEnsure Social Security solvency for the next 75 years while reducing poverty among seniors._6c1d435a-edd7-11df-a5c7-1a187a64ea2a5SeniorsStrengthening Social SecurityStrengthen Social Security for the long haul by returning the system to sustainable solvency._6c1d4990-edd7-11df-a5c7-1a187a64ea2a5.1SeniorsLong-Term SolvencyEnsure Long-Term Social Security Solvency_6c1d5016-edd7-11df-a5c7-1a187a64ea2a5.1.1ProgressivityIncrease progressivity of benefit formula_6c1d5656-edd7-11df-a5c7-1a187a64ea2a5.1.1.1Benefit FormulaGradually move to a more progressive benefit formula by creating a new bend point at the 50th percentile and reducing upper replacement factors slowly over time, phased in by 2050_6c1d5c46-edd7-11df-a5c7-1a187a64ea2a5.1.1.2Retirement AgeIndex retirement age to increases in longevity_6c1d62b8-edd7-11df-a5c7-1a187a64ea2a5.1.1.3IncreasesThis option is projected to increase the age by one month every two years after it reaches 67 under current law, meaning the normal retirement age would reach 68 in about 2050 and 69 in about 2075_6c1d6948-edd7-11df-a5c7-1a187a64ea2a5.1.1.3.1Hardship ExemptionHardship exemption for those unable to work beyond 62_6c1d6f38-edd7-11df-a5c7-1a187a64ea2a5.1.1.3.2Measure of InflationSwitch to a more accurate measure of inflation (chained CPI) for calculating COLAs_6c1d75be-edd7-11df-a5c7-1a187a64ea2a5.1.1.4State and Local WorkersInclude newly hired state and local workers in Social Security after 2020_6c1d7c08-edd7-11df-a5c7-1a187a64ea2a5.1.1.5Payroll Tax BaseBroaden the Payroll Tax Base_6c1d820c-edd7-11df-a5c7-1a187a64ea2a5.1.2Taxable MaximumGradually increase the taxable maximum to capture 90 percent of wages by 2050_6c1d88b0-edd7-11df-a5c7-1a187a64ea2a5.1.2.1* Under current law, the taxable maximum is pegged to growth in average wages. In 2009, the taxable maximum captured almost 86 percent of earnings, but it will fall to 82.5 percent by the end of the decade. * Phasing into a higher taxable maximum slowly will prevent large marginal changes and will prevent rapid buildup of the trust fund.Retirement DecisionsPromote Smart Retirement Decisions_6c1d8fae-edd7-11df-a5c7-1a187a64ea2a5.1.3Claims FlexibilityAllow greater flexibility in how benefits are claimed_6c1d95e4-edd7-11df-a5c7-1a187a64ea2a5.1.3.1Retiree ChoicesGive retirees the choice of collecting half their benefits early and the other half at a later age to minimize impact of actuarial reduction and support phased retirement options._6c1d9ca6-edd7-11df-a5c7-1a187a64ea2a5.1.3.1.1RetireesEarly RetirementDirect SSA to design a way to provide for the early retirement needs of workers in physical labor jobs_6c1da30e-edd7-11df-a5c7-1a187a64ea2a5.1.3.2AccommodationsRequire SSA to have accommodation in place before longevity indexation begins and set aside funds to pay for new policy._6c1da944-edd7-11df-a5c7-1a187a64ea2a5.1.3.2.1Retirement InformationImprove information on retirement choices_6c1db01a-edd7-11df-a5c7-1a187a64ea2a5.1.3.3Education CampaignDevelop an education campaign to encourage greater personal savings, delayed retirement, and phased retirement._6c1db6fa-edd7-11df-a5c7-1a187a64ea2a5.1.3.3.1Early BenefitsBetter inform beneficiaries of the costs and benefits of collecting benefits early._6c1dbd6c-edd7-11df-a5c7-1a187a64ea2a5.1.3.3.2Benefit CutPrevent the 22% across the board benefit cut projected to occur in 2037._6c1dc442-edd7-11df-a5c7-1a187a64ea2a5.2Elderly PovertyReduce elderly poverty by putting into place a new, effective special minimum benefit._6c1dcae6-edd7-11df-a5c7-1a187a64ea2a5.3The ElderlyNew ProtectionsAdd new protections for the most vulnerable_6c1dd144-edd7-11df-a5c7-1a187a64ea2a5.3.1Minimum BenefitAdd a new special minimum benefit to keep full-career minimum wage workers above the poverty threshold._6c1dd838-edd7-11df-a5c7-1a187a64ea2a5.3.2Minimum Wage WorkersWage-IndexingWage-index the minimum benefit to make sure it is effective both now and in the future._6c1ddf40-edd7-11df-a5c7-1a187a64ea2a5.3.3Benefit BoostProvide a benefit boost to older retirees most at risk of outliving other retirement resources._6c1de5e4-edd7-11df-a5c7-1a187a64ea2a5.3.4Older RetireesSecure RetirementEnable system to continue to provide for a secure retirement as the population grows older and Americans live longer._6c1ded32-edd7-11df-a5c7-1a187a64ea2a5.4ReformReform Social Security for its own sake, not for deficit reduction._6c1df412-edd7-11df-a5c7-1a187a64ea2a5.5Social Security Options[Consider] Alternative Social Security Options_6c1dfab6-edd7-11df-a5c7-1a187a64ea2a5.6Low-Income WidowsIncrease benefits for low-income widows_6c1e0204-edd7-11df-a5c7-1a187a64ea2a5.6.1Low-Income WidowsReduces balance by 0.06% of payrollSpousal BenefitCap spousal benefit at one-half of average worker’s benefit_6c1e0966-edd7-11df-a5c7-1a187a64ea2a5.6.2Improves solvency by 0.08% of payrollCollege BenefitsReinstate college benefits for child survivors_6c1e1050-edd7-11df-a5c7-1a187a64ea2a5.6.3Child SurvivorsReduces balance by 0.07% of payrollCafeteria PlansTax cafeteria plans in same manner as 401(k) plans_6c1e17da-edd7-11df-a5c7-1a187a64ea2a5.6.4Improves solvency by 0.22% of payrollDisability InsuranceUncap the Disability Insurance (DI) portion of FICA taxes (1.8%)_6c1e1e60-edd7-11df-a5c7-1a187a64ea2a5.6.5Improves solvency by 0.34% of payrollEmployer-Sponsored Health InsuranceFully or partially tax employer-sponsored health insurance _6c1e24a0-edd7-11df-a5c7-1a187a64ea2a5.6.6Solvency impact dependent on designDelayed Retirement CreditConvert delayed retirement credit into one-time bonus_6c1e2c98-edd7-11df-a5c7-1a187a64ea2a5.6.7No solvency impactAutomatic StabilizerInclude automatic stabilizer with future benefit and/or revenue changes_6c1e331e-edd7-11df-a5c7-1a187a64ea2a5.6.82010-11-102010-11-11http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/CoChair_Draft.pdfOwenAmburOwen.Ambur@verizon.net