On November 21, 2011, the co-chairs of the Joint Select Committee on Deficit Reduction, Representative Jeb Hensarling and Senator Patty Murray, announced that the panel would not be able to reach a deficit reduction agreement before the Committee’s deadline. Under the Budget Control Act, the bipartisan Joint Select Committee was required to identify $1.5 trillion in deficit reduction by November 23, which was then to be considered by Congress under expedited procedures. If legislation is not adopted to achieve deficit reduction targets by January 2012, $1.2 trillion in across-the-board spending cuts (sequestration) will be triggered, effective January 2013. While Medicare provider payments are subject to reduction under the enforcement mechanism, those reductions are capped at 2%. The Congressional Budget Office (CBO) has estimated that Medicare cuts under sequestration would total approximately $123 billion between 2013 and 2021 (other budget proposals under consideration contemplated much deeper cuts). Given that sequestration does not go into effect until 2013, lawmakers still have time to consider alternatives to sequestration, although compromise has been elusive to date (and President Obama has promised to veto any effort to repeal the automatic spending cuts absent an alternative deficit reduction agreement).
