The Gang of Six's plan: Better than we're likely to do otherwise

By Ezra Klein
WashPost

Let's start with what's in the Gang of Six's plan (pdf) — or at least what we know is in it.

The first piece is $500 billion in immediate cuts and new revenue. That mainly comes through a cap on discretionary spending and slowly moving the government's measure of inflation to chained-CPI, which ends up reducing Social Security benefits and raising taxes. It also repeals the CLASS Act, which doesn't save any money in the short-term but potentially saves a fair amount in the long term, lays down some new budgetary rules and sells off some federal property.

But that's $500 billion out of a planned $3.7 trillion. So it's really what comes next that's interesting.

Entitlements come next. The proposal directs the Senate Finance Committee to find $300 billion in health savings to permanently fix the way Medicare pays doctors, and then to pull out another $200 billion in health savings — or perhaps it's $85 billion, the document is slightly confusing — on top of that. It also directs the committee to "maintain the essential health services the poor and the elderly rely on." I take that to mean structural changes such as the Ryan Plan are off the table, but things like raising the Medicare eligibility age or increasing cost sharing are fair game. Various other committees ranging from Armed Services to Energy then have to find another $250 billion or so. We're talking a lot of money here, so the cuts will have to go deep.

(More here.)