Medicare and other federal programs could be cut if Congress approves a tax law that increases the federal deficit, say community leaders in the central San Joaquin Valley.
Estimates are that the tax bills passed by the House and Senate would increase the federal deficit by about $1.5 trillion over a decade. A conference committee has yet to work out the differences in the two bills, but the concern is that entitlement programs will be cut to reduce the nation’s debt.
Valley seniors, members of labor groups, city council members and faith leaders say such an increase in the deficit would trigger a law requiring Congress to make immediate cuts of over $100 billion per year to health and human services programs, including a $25 billion cut to Medicare.
Valley Republican leaders say talk of cutting Medicare is a scare tactic. The tax-cut package will stimulate the economy, help the middle class and generate tax revenues to close the deficit gap.
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In the Valley, more than 270,000 elderly and people with disabilities have Medicare insurance, about 1 million low-income adults and children have Medi-Cal (California’s version of Medicaid), and nearly 400,000 people get Social Security benefits.
I am very concerned that at my age, 79 years old, that there will be some cuts to Social Security, there will be cuts to Medicare, Medicaid and all the things I need to survive on.
Vic Pasnick, Fresno
A potential Medicare cut has local seniors sounding an alarm.
Gene Roza, a member of the California Alliance for Retired Americans, said the Republican-led House and Senate tax bills would reduce corporate taxes at the expense of seniors. “What we have now is a GOP tax scam,” he said. “It’s basically an idea to give more money to people who don’t need it.”
Roza was among about 40 people who rallied against the Republican tax package Wednesday in front of Fresno City Hall. The group called for Reps. David Valadao, R-Hanford, and Devin Nunes, R-Tulare, to vote against any tax bill that could lead to cuts in Medicare and other programs.
Ruth Afifi, 80, of Fresno, was among those protesting the tax plan. “I don’t think we should be attacking Medicare at all,” she said. “It works fine. It’s a wonderful system. It’s very efficient.”
The mechanism that could be used to cut Medicare is the Statutory Pay-As-You-Go Act of 2010. The law could be tripped if the deficit significantly increases and would require a reduction in federal spending.
The California Hospital Association has looked at the potential effect to Medicare from tax cuts, including the Pay-As-You-Go provision. If the reduction in spending law should be tripped “we think it’s a $2.5 billion hit for hospitals,” said Jan Emerson-Shea, vice president of external affairs.
Congress can waive the Pay-As-You-Go law, and so far it has never been used. Fred Vanderhoof, chairman of the Fresno Republican Party Central Committee, said Democrats are trying to scare voters. “I have not heard of any Republican in the House or Senate say anything about cutting Medicare or Social Security because of the tax cut,” he said.
Requests for a comment from Nunes about tax cuts and the potential for cuts to entitlement programs were not returned this week.
I have not heard of any Republican in the House or Senate say anything about cutting Medicare or Social Security because of the tax cut.
Fred Vanderhoof, chairman of the Fresno Republican Party Central Committee
Anna Vetter, deputy chief of staff for Valadao, replied in an email that the Pay-As-You-Go reduction has never taken place, “and Congressman Valadao, who has a strong record of defending the programs his constituents rely on, will ensure one does not happen today.”
Vetter said the tax package is good for the Valley. “The Tax Cuts and Jobs Act will provide desperately needed tax relief to Central Valley families who are struggling from high unemployment levels, reduced wages and a stagnant economy,” she said.
But Rep. Jim Costa, D-Fresno, said 87,159 Medicare beneficiaries live in his congressional district, and Valley residents’ concerns about cuts to the Medicare program are valid.
“I would refer you to a press conference that speaker Paul Ryan had this morning. He said specifically this morning in order to get our deficit under control, that next year we’re going to have to be revisiting entitlement programs and he specifically identified Medicare.”
Conservative estimates are that the deficit from the House bill is over $2 trillion and the Senate bill is over $1 trillion, Costa said. “It’s one of the reasons I think this whole tax proposal was so flawed. It was supposed to be deficit neutral, but it’s not.”
Vic Pasnick of Fresno is worried. “I am very concerned that at my age, 79 years old, that there will be some cuts to Social Security, there will be cuts to Medicare, Medicaid and all the things I need to survive on.”
Pasnick, who maintains his real estate agent’s license, said it’s tough making ends meet. “I barely scrape by on Social Security. If they cut it I would be in one of the public housing units somewhere, trying to get by.”
He questions whether reducing corporate taxes will result in more private industry jobs and additional government revenues as Republican legislators contend. “All they’re going to do is use it for automation so they can get rid of some of the pesky things like decent wages, overtime, lunch breaks – just buying machinery to replace workers, and that’s what they will do with the money.”