By Alexander Bolton - 12/28/12 06:46 PM EST
Two centrist Republican senators on Friday introduced a plan to reduce the growth of entitlement spending by nearly $1 trillion in exchange for an equal increase to the federal debt ceiling.
Republican senators have given up on including significant entitlement reform in the year-end deal being negotiated by President Obama, Senate Majority Leader Harry Reid (D-Nev.) and Senate Republican Leader Mitch McConnell (Ky.).
“I think at this moment ... it’s pretty apparent that we’re not going to do what we’ve been called to do,” Coker said at a press conference.
The Corker-Alexander dollar-for-dollar plan has several components.
It would structurally reform Medicare by creating competing private options giving seniors greater choice of healthcare plans. It would not, however, cap Medicare spending.
The plan would also give states more flexibility to manage Medicaid programs and prevent states from “gaming the federal share of the program with state tax charges.”
It would gradually raise the Social Security retirement age and use the “chained CPI” formula to calculate cost-of-living adjustments, curbing the growing cost of benefits.
In exchange, it would direct the debt limit be increased by the same amount as the savings generated from entitlement reform.
“Unfortunately for America, the next line in the sand is going to be the debt ceiling,” said Corker, predicting it could be used as leverage in negotiations with Democrats.
“We hope that then we will turn to the serious business of reforming our entitlements,” he said. “This bill basically over the next 10 years will produce about $1 trillion in savings and reforms to cause these programs to be solvent over the long haul so future seniors will have the opportunity to enjoy these benefits.”
Treasury Secretary Timothy Geithner sent a letter to Congress Wednesday informing lawmakers the government will hit the statutory debt limit on Dec. 31.
Geithner said the Treasury Department would take “certain extraordinary measures to temporarily postpone” the expiration of the debt limit, but warned it could not be delayed for much more than two months.
Alexander called on Obama to show more leadership on reforming entitlements or earned-benefits programs such as Medicare and Medicaid, which are the biggest drivers of federal debt.
“I don’t believe you can make a change of this magnitude without presidential leadership. In our country’s history, major crises have been resolved by presidential leadership or not at all,” he said. “This will sound unpopular, this is bad medicine for many people, but it is part of what we are supposed to do.
“[Obama] hasn’t lead in the way he is capable of leading,” Alexander added.