The National Association for the Advancement of Orthotics & Prosthetics (NAAOP) has issued the following statement regarding U.S. debt-ceiling negotiations:
Congressional leaders are clamoring to find middle ground this week on a debt-ceiling deal as the deadline for raising the limit draws closer, raising the serious prospect of a U.S. default. If Congress does not act to raise the debt ceiling on or before August 2, the United States will not be able to borrow enough money to cover its debts, leading to potentially catastrophic economic harm throughout the country and across the globe. Although federal officials are quick to note that they are unsure how hard markets would be hit, most economists agree that failing to raise the ceiling would cause the economy to spiral downward. It is also unclear what payments the government would cease to pay first, though without an eventual fix to the problem, the entitlement programs such as Medicare and Medicaid-two payers of O&P services-would inevitably suffer. The markets continue to fluctuate with this uncertainty.
The current political climate has made it tougher to negotiate a fix, either short or long term. First, Congress and the White House are gearing up for the 2012 Presidential election, the first after the historic election of the nation’s first African American president and the first after the rise of the so-called Tea Party, which brought to Congress legislators firmly committed to reigning in government spending. Fiscal conservatives are using the debt-ceiling deadline to zero in on their goal of downsizing government. Finally, the economy continues to grow very slowly out of the recession, and this applies even more pressure to already stretched entitlement and social service programs. Add to those variables the budget crunch that cash-strapped states are facing, and healthcare providers, such as O&P professionals, have reason to be worried.
While conservatives want to rein in spending and prefer to offset any raise in the debt ceiling with cuts to spending and no tax increases, liberals prefer to offset the debt ceiling with a combination of spending cuts and tax increases, while protecting entitlement programs. President Obama has spent the past few weeks attempting to broker a compromise, and although press reports have indicated that there were times when a deal could have been close, negotiations ended abruptly twice in the past three weeks. Initially, the President called for Congressional leaders to strike a “grand” bargain, one that would include entitlement cuts, tax increases, cut the deficit by about $4 trillion over 10 years, and lift the debt ceiling by $2.5 billion. However, political developments early this week indicated that shorter term fixes are perhaps more likely.
On Monday, Senate Majority Leader Harry Reid (D-NV) released a plan that would raise the debt-ceiling enough to cover the nation’s financial obligations through next year’s election, while cutting spending by about $2.7 trillion-the same amount by which the debt-ceiling would be raised. Notably, Medicare and Medicaid cuts are not part of Senator Reid’s plan at this time. But the plan would establish a joint congressional committee to identify future savings. The committee’s recommendations would be guaranteed an up-or-down Senate vote, without amendments, by the end of 2011. This means that all of Washington would be focused on entitlement reforms to Medicare and Medicaid, and possibly Social Security, throughout the fall.
Meanwhile, House Speaker John Boehner (R-OH) released a separate proposal that calls for a vote in the fall of 2011 to amend the U.S. Constitution to require a balanced budget. The plan also raises the debt ceiling through the end of calendar year 2011 by $1 trillion and cuts about $1.2 trillion in spending. The plan would achieve these cuts by capping discretionary spending and implementing across-the-board cuts if the caps were exceeded.
The House plan also calls for a joint committee to report, and Congress to approve, a deficit-cutting package by December 23 of this year. If this were to occur, President Obama would receive the remainder of the borrowing authority needed to cover the remaining $1.7 trillion of deficit spending through the 2012 elections. If the plan were to stall in Congress, President Obama would face another debt deadline early in 2012.
The President and House Democrats have said that they would like to avoid another vote next year on the debt ceiling. President Obama recently indicated his support for the Reid plan and presented his case for its passage in a nationally televised appearance Monday evening. Shortly thereafter, House Speaker Boehner also spoke to relate his perspective on the stalemate. Today, the two parties appear no closer to a compromise while the clock ticks down to the August 2 deadline.
Whether or not Congress is able to agree with the President to raise the debt ceiling in the short or long term, a failure to significantly cut spending may force a first-ever downgrading of the U.S. bond rating. The consequences or this are unprecedented, but it would clearly be a setback in the effort to revive the U.S. economy and likely raise interest rates. Spending cuts in the $4 trillion range will necessitate reforms to the Medicare and Medicaid programs, and this is what Congress is expected to be focused on this fall, assuming a significant deal is agreed upon.
Orthotic and prosthetic professionals, through NAAOP and like-minded national organizations, must remain vigilant not only during the short-term negotiations, but during the long months ahead during which Congressional leaders continue to address the deficit through more specific reforms to Medicare and Medicaid.
NAAOP will continue to keep its members and friends informed of developments as they occur. For more information, visit www.naaop.org or e-mail [email protected]. Access NAAOP’s Congressional Legislative Action Center at www.naaop.org to communicate with your congressman or senator.