The Debt Ceiling Deal

How Will It Affect Social Security, Medicare and Medicaid?

The nation was brought back from the brink of default this past August when Congress passed and President Obama signed the Budget Control Act of 2011. Nearly $1 trillion in spending cuts will be made over the next 10 years. Although Social Security, Medicare and Medicaid are not included in these cuts, the programs are still at risk of an extreme makeover—in the form of structural changes that ultimately would reduce people’s benefits.

The Budget Control Act created a two-step process to cut $1.2 trillion from the federal budget. It establishes the congressional Joint Select Committee on Deficit Reduction, also known as the “supercommittee,” which is made up of 12 legislators—three Democrats and three Republicans from the House of Representatives, and three Democrats and three Republicans from the Senate. If the supercommittee or Congress fails to enact the $1.2 billion in cuts, an automatic order called “sequestration” must cut the $1.2 trillion from existing programs.

The supercommittee

The supercommittee has unprecedented authority; its recommendations will be specific, including sweeping and fundamental changes to programs such as Social Security, Medicare and Medicaid. The supercommittee can raise taxes, and it has the power to write legislation and policies to reach the savings goal.

The supercommittee must submit its plan to Congress for consideration by Nov. 23, 2011. Congress must have an up or down vote (no amendments or filibusters) by Dec. 23. If Congress approves the recommendations and the president signs a final bill, then the debt ceiling can be raised. But if the supercommittee cannot agree to a plan, the debt ceiling will be reduced.

If $1.2 trillion in cuts are not achieved, or the cuts are less than $1.2 trillion, a “sequestration order” will cut the amount of existing federal programs to meet this goal (see "Sequester").

The supercommittee will move fast. It can change entitlements; it can also add taxes. This means raising revenue without making changes to Social Security, Medicare or Medicaid that would jeopardize a secure retirement for all. If the supercommittee’s entire plan is to cut spending, it could mean roughly $2.4 trillion in cuts to federal programs, virtually gutting important programs on which we all depend. These cuts would include programs that protect our public health, our food and drug supply, and our infrastructure. Such cuts would hurt public education, nutrition and health programs, and programs that help keep the social contract we’ve made to help people in poverty, people with disabilities and older Americans. For more information, download the AFT/ARA Super Committee Fact Sheet.

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