July 19 A bipartisan group of U.S. senators on
Tuesday offered an ambitious deficit reduction plan that could
help break an impasse over spending cuts and tax increases and
advance efforts to raise the U.S. credit limit by Aug. 2.
Here are the elements of the so-called Gang of Six plan,
which still lacks many specifics:
* Slash $3.7 trillion in deficits over 10 years.
* Stabilize amount of debt held by private investors by
* Reduce debt held by investors to roughly 70 percent of
U.S. Gross Domestic Product by 2021. Currently, publicly-held
debt is projected to rise to 77 percent of the economy in 2021,
from 69 percent of GDP currently.
* Establish tough new budget enforcements.
SPENDING CUTS AND TAX REFORM
* Calls for an immediate $500 billion in deficit
* Imposes statutory caps on discretionary spending, that is
the part of the budget subject to annual review.
* Changes inflation measure used to calculate cost of
living increases for a number of government programs and tax
breaks. The shift would slow benefit increases.
* Social Security would be exempt from the inflation
measure change for five years and then the retirement program
would gradually shift over to the new inflation measure.
* Calls for tax code overhaul to reduce the number of tax
breaks, raise $1.2 trillion in revenues, lower tax rates and
abolish the $1.7 trillion alternative minimum tax, a tax that
was intended for the wealthy but has been hitting more middle
* Calls for savings in Medicare and Medicaid health care
programs for the elderly and poor, but leaves to various Senate
committees to work out details.
* Medicare savings would be used to ensure doctors do not
suffer a pay cut. Doctors face a 30 percent Medicare pay cut in
January under the current payment formula.
* Overhauls Social Security to ensure its 75-year
* Repeals the so-called CLASS Act, a provision of last
year's healthcare overhaul that establishes a voluntary
insurance program to provide a cash benefit to help pay for
home services for the disabled.
* Requires the Labor Department and Government
Accountability Office to recommend a "more effective" trigger
for unemployment insurance.
(Reporting by Donna Smith; Editing by Paul Simao)