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Divisions clear on entitlement debate


By Rich Daly
Posted: June 23, 2011 - 3:00 pm ET
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In a public reflection of closed-door debates likely occurring over a solution to the federal debt crisis, Republicans and Democrats offered starkly different approaches in a Senate hearing Thursday on offsetting the cost of healthcare driving ever-larger federal annual deficits and accumulated debt.

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Democrats on the Senate Finance Committee repeatedly urged tax increases while noting that current federal revenue of 15% of gross domestic product is well-below the 19% average of recent decades.

“If we believe that the poor and disabled should be covered then we need to ask everyone to pay their fair share,” Massachusetts Gov. Deval Patrick, a Democrat, said in testimony that echoed the panel's Democrats.

But federal projections show that even when federal tax receipts rise back to 19% of GDP annual deficits of $1.2 trillion will continue, Douglas Holtz-Eakin, president of the conservative American Action Forum, said in his testimony.

He and Republicans urged changes to the federal healthcare programs, such as those included in the House-passed budget that would phase in subsidized private insurance for Medicare and turn Medicaid into capped block grants for states.

The divide probably echoes the schism among a group of bipartisan deficit negotiators led by Vice President Joe Biden. A sign of that divide was seen publicly Thursday when House Minority Leader Eric Cantor (R-Va.) announced he was pulling out of the negotiations until President Barack Obama addressed whether the deficit deal would forgo tax increases, as Republicans have demanded.


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