By Catey Hill
This week, Sen. Chuck Schumer (D-New York) predicted that the so-called “super committee” — a group of twelve Congressional leaders tasked with reducing our deficit — will fail by not being able to find the $1.2 trillion in savings they’re supposed to. “I don’t think the Super Committee is going to succeed because our Republican colleagues have said ‘no net revenues,’” he told MSNBC. If he’s right, it may have a significant impact on Medicare and shake-up markets.
Is the super committee poised to fail? No one knows for sure, but experts suggest negotiations aren’t looking good. For one, this group has to find a total of at least $1.2 trillion in savings over the next decade by Nov. 23 — no small task. Now add in that this group is made up of six Republicans and six Democrats — two political parties that, as of late, seem especially inclined to disagree. Reports say Republicans are digging in their heels on tax increases, Democrats on big cuts to Social Security and Medicare. Obama’s budget director Jack Lew said at a conference today that while it is “premature” to say they’ll fail, there’s still “reason to be cautious,” as the “challenges that the super committee has are very substantial.”
If the super committee isn’t successful, seniors may feel the impact, as it would trigger automatic cuts to Medicare. Here’s how it will work: Payments to Medicare providers — like hospitals and doctors — will be cut by up to 2%, resulting in about $11 billion in savings in the 2013 budget. While that doesn’t directly impact Medicare beneficiaries, “seniors may indirectly feel the impact,” says Mary Johnson, a senior policy analyst for the Senior Citizen’s League, a non-profit seniors rights advocate. First, hospitals may have to cut programs that take Medicare due to these kinds of budget cuts, she says. Plus, doctors may simply refuse to accept Medicare, she adds. To read more about the automatic cuts to Medicare, click here.
What’s more, a failure of the super committee to agree may shake-up markets, experts say. For retirees on a relatively fixed nest egg, that can be especially jarring, though there are things you can do to protect your nest egg amidst volatility.