Senator’s cuts plan could save US $9tn

ONE of the US Senate’s staunchest budget-cutters unveiled a massive plan to cut the nation’s deficit by $9 trillion (€6.4tn) over the coming decade.

The plan by Republican Oklahoma senator Tom Coburn is laced with politically perilous proposals like raising to 70 the age at which people can claim their full Social Security benefits.

It would cut farm subsidies, Medicare, student aid, housing subsidies for the poor, and funding for community development grants. Coburn even takes on the powerful veterans’ lobby by proposing that some veterans pay more for medical care and prescription drugs.

Coburn was a member of US President Barack Obama’s fiscal commission and voted for its plan to cut the budget by about $4tn over a decade.

His re-entry into the deficit debate comes as Obama and lawmakers struggle over increasing the so-called debt limit and avoid a first-ever default on US obligations.

Coburn’s $9tn savings figure doesn’t include another $2.4tn in cuts to Social Security that are funnelled back into the programme.

In addition to raising the retirement age gradually, he would peg future benefits to a less-generous measure of inflation and curb benefit increases even more for the top 40% of earners.

Cuts to the Medicare scheme for the elderly and the Medicaid health plan for the poor and disabled would total $2.6tn over 10 years.

He proposes raising the Medicare retirement age to 67 by 2027 and then gradually increasing it until the retirement age hits 69 in 2080. It would also raise Medicare premiums for doctor visits so that premiums pay 35% of such costs instead of the 25% currently covered.

Coburn would also eliminate $1tn in tax breaks over the coming decade, earning him an immediate rebuke from Americans for Tax Reform, an anti-tax organisation with which Coburn has had a running feud.

He would block taxpayers from claiming the mortgage interest deduction on second homes and limit it to homes worth $500,000. He would also ease taxpayers into higher tax brackets more quickly by using a smaller measure of inflation to adjust the brackets.

Coburn would also cut $1tn from the Pentagon budget over a decade.

“I have no doubt that both parties will criticise portions of this plan, and I welcome that debate,” Coburn told reporters.

“But it’s not a legitimate criticism until you have a plan of your own.”