Ok. We’ve been loathe to cover the debt ceiling drama but it appears that one of the key programs on the chopping block for the ‘Gang of Six’ proposal is the CLASS Act.
The Gang of 6 plan calls for the repeal of the CLASS act as part of the ObamaCare plan, which is part of $200 billion in cuts to federal health spending according to Politico.
The other portion of the plan certain to ruffle the feathers of the 55+ demographic in the US is the proposed reduction in the Social Security Cost of Living Adjustments (COLAs) that move to a chained CPI combined with a higher tax threshold. The trade-off is that the plan calls for increases in social security spending to offset the lower COLAs and higher tax thresholds. While there’s an attempt for a balanced solution, the drama kings and queens will gravitate towards the COLA adjustments and tax increases.
If the CLASS Act does face the knife, it will be one of the shortest lived programs passed to help with the aging population.
Based upon the rhetoric and the Gang of Six plan, lawmakers are concered that the costs of the program will spiral out of control over the life of the program.
The repeal of the Act will be a loss for seniors and the Obama Administration in the short term. The question will be whether the benefits of the original concept from the CLASS Act outweigh the immediate spending cuts over the long term as the costs for older americans places more pressure on fiscal policy down the road. Pay me now, pay me later….in the end, we’re all going to pay.
For a easy to read explanation of the “Gang of Six Plan”, click here.