(Reuters) - A bipartisan group of U.S. senators on Tuesday offered an ambitious deficit reduction plan that could help break an impasse over spending cuts and tax increases and advance efforts to raise the U.S. credit limit by August 2.
Here are the elements of the so-called Gang of Six plan, which still lacks many specifics:
* Slash $3.7 trillion in deficits over 10 years.
* Stabilize amount of debt held by private investors by 2014.
* Reduce debt held by investors to roughly 70 percent of U.S. Gross Domestic Product by 2021. Currently, publicly-held debt is projected to rise to 77 percent of the economy in 2021, from 69 percent of GDP currently.
* Establish tough new budget enforcements.
SPENDING CUTS AND TAX REFORM
* Calls for an immediate $500 billion in deficit reduction.
* Imposes statutory caps on discretionary spending, that is the part of the budget subject to annual review.
* Changes inflation measure used to calculate cost of living increases for a number of government programs and tax breaks. The shift would slow benefit increases.
* Social Security would be exempt from the inflation measure change for five years and then the retirement program would gradually shift over to the new inflation measure.
* Calls for tax code overhaul to reduce the number of tax breaks, raise $1.2 trillion in revenues, lower tax rates and abolish the $1.7 trillion alternative minimum tax, a tax that was intended for the wealthy but has been hitting more middle class people.
* Calls for savings in Medicare and Medicaid health care programs for the elderly and poor, but leaves to various Senate committees to work out details.
* Medicare savings would be used to ensure doctors do not suffer a pay cut. Doctors face a 30 percent Medicare pay cut in January under the current payment formula.
* Overhauls Social Security to ensure its 75-year solvency.
* Repeals the so-called CLASS Act, a provision of last year's healthcare overhaul that establishes a voluntary insurance program to provide a cash benefit to help pay for home services for the disabled.
* Requires the Labor Department and Government Accountability Office to recommend a "more effective" trigger for unemployment insurance.
(Reporting by Donna Smith; Editing by Paul Simao)