Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, December 10, 1994 TAG: 9412130016
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: METRO
SOURCE: KNIGHT-RIDDER/TRIBUNE
DATELINE: WASHINGTON LENGTH: Medium
Commission members - 32 politicians and private citizens who represent a cross section of views - reacted as if a firecracker had been tossed in their midst. While some called the proposal ``bold,'' others denounced it as disastrous. Most pleaded for postponing a vote on it scheduled for Wednesday.
The National Commission on Entitlement and Tax Reform is supposed to report to President Clinton on ways to curb the cost of entitlements - benefit programs that are the fastest-growing part of the budget.
The plan by Sens. Bob Kerrey, D-Neb., and John Danforth, R-Mo. - chairman and vice chairman of the commission - is unlikely to become law, but it serves to illustrate the painful choices facing lawmakers who want to balance the budget.
Among the recommendations: Raise the Social Security retirement age and Medicare eligibility age to 70, charge a premium for Medicare hospital coverage, raise premiums for Medicare coverage of doctor visits, impose an ``affluence test'' on all benefits except Social Security, tighten limits on itemized deductions for upper-middle-income people, and place a lid on the amount employers can deduct for their workers' health insurance.
The plan includes proposals that would alter the basic nature of Social Security and Medicare: It would cut Social Security taxes by 1.5 percent and require people to put the money in their own Individual Retirement Accounts, and it would encourage those enrolled in Medicare to join health-maintenance organizations.
On the politically popular side, Kerrey and Danforth would cut congressional pensions and welfare payments.
Benefit programs now account for about half the budget. Driven by rising health care costs and an aging population, entitlements spending will begin pushing the deficit up again in 1996.
If current trends continue, benefit programs and interest costs will siphon off every penny of federal tax revenue in 2012. Cutting entitlements, however, is unpopular because nearly half of U.S. families receive some benefit.
Kerrey acknowledged there's only a handful of votes on the commission for his plan. The commission's charter requires a three-fifths vote (20 members) to send a recommendation to Clinton. Members held out the possibility that they could reach agreement on a less-sweeping package.
But Kerrey seemed adamant. ``Making a partial recommendation implies that a partial solution is OK,'' he said. ``I believe it is not.''
He told reporters: ``There will be people out there - each with a little knife - trying to inflict damage on the effort.''
Critics - including organized labor, groups representing the elderly and incoming House Speaker Newt Gingrich - wasted no time.
Gingrich already had labeled the commission elitist. He said Republicans would not back any Social Security cuts. Liberals said the commission should be calling for health care reform, higher payroll taxes and an end to corporate tax breaks - not benefit cuts.
Commission member Richard Trumka, president of the United Mine Workers, complained that the plan would slash the average Social Security benefit 45 percent and gut Medicare. ``This commission's message to America is that we must destroy the programs in order to save them,'' he said.
Commission member Pete Peterson, an investment banker and deficit critic, said the plan is unfair to younger workers. Because Kerrey and Danforth recommended that changes be phased in slowly, workers over 50 are not affected at all, while those under 28 bear the full brunt of the cuts. Peterson, who supports scaling back entitlements, said the burden needs to be distributed better among generations.
Commission member Robert Greenstein warned that the combined effect of the proposed cuts could shove people on the lower rungs of the middle class down into poverty.
by CNB