CBO: Tax Bill Could Trigger $25B in Medicare Cuts in 2018

The Congressional Budget Office (CBO) on Tuesday said the Republican tax legislation, that would increase the deficit by $1.5 trillion if passed, could spur $25 billion in Medicare cuts in 2018.

The Congressional Pay-As-You-Go Act of 2010 (PAYGO) requires automatic cuts to kick in if new legislation causes the deficit to hit a certain threshold. In this case, the Office of Management and Budget (OMB) would need to cut $136 billion in 2018.

PAYGO limits the reductions to Medicare to 4 percent, or roughly $25 billion for 2018, according to CBO's guidance. That would leave about $111 billion "to be sequestered from the remaining mandatory accounts," the CBO wrote.

But CBO also said there's only $85 to $90 billion eligible to be cut from unprotected programs, "significantly less than the amount that would be required to be sequestered."

"Given that the required reduction in spending exceeds the estimated amount of available resources in each year over the next 10 years, in the absence of further legislation, OMB would be unable to implement the full extent of outlay reductions required by the PAYGO law," the CBO wrote.

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