Conservative leaders warn the president’s newly announced deficit reduction commission could be a smokescreen to give the Democrats political cover for raising taxes by putting Republican fingerprints on the panel’s recommendation.
“If they are not going to rule out a tax increase and not deal with discretionary spending, and wait until after the election to give their report, what’s the point?” Rep. Mike Pence, R-Ind., the number three ranking Republican in the House told Newsmax.
The president, however, refuses to take tax hikes off the agenda.
This year the deficit is expected to hit $1.6 trillion ̶ 11 percent of the nation’s GDP ̶ the highest since World War II. The Obama administration says cutting discretionary spending would do little to allay deficits approaching $1 trillion for the rest of the decade. The commission will be tasked with finding a way to bring the deficit within 3 percent of GDP by 2015.
Obama’s panel, announced Feb. 18, will be chaired by former Clinton chief of staff Erskine Bowles and former Wyoming Republican Sen. Alan Simpson.
The president established the commission by executive order after the Senate rejected the creation of a similar panel with statutory powers to recommend deficit-reduction measures to Congress for an up or down vote.
Twenty-two Democrats and 23 Republicans voted against the commission, which had initially been championed by Sen. Judd Gregg, R-N.H., who ended up voting against the measure.
The president’s panel lacks the power to propose potentially binding changes unlike what had been proposed in the Senate and will deliver its recommendations Dec. 1.
Americans For Tax Reform President (ATR) Grover Norquist questions the president’s effort to claim the panel is bipartisan because he gets to select the commission’s members.
Norquist’s group criticized Obama’s selection of Simpson as the commission’s Republican co-chair because of the role he played in the 1982 and 1990 tax hikes.
“While a U.S. Senator, Simpson voted for two ‘bipartisan deals,’ which had real tax increases and phony spending cuts,” ATR said in a release. “The first was the 1982 ‘TEFRA’ bill, which promised $3 in spending cuts for every $1 in tax hikes. The second was the 1990 ‘Read My Lips’ deal struck at Andrews Air Force Base , which promised $2 in spending cuts for every $1 in tax hikes.
“In each case, every penny of the tax hikes went through. Also in each case, the spending restraint never materialized.”
According to a 1991 Heritage Foundation report, the 1990 budget deal had the net result of increasing the federal deficit rather than reducing it because it gutted constraints on spending that were imposed by the 1985 Gramm-Rudman-Hollings Deficit Reduction Act.
Norquist said the 1990 budget deal fatally damaged President George H.W. Bush’s chances for re-election, and he predicts Obama’s deficit reduction commission likely will deliver similar results to the 1982 and 1990 efforts.
Putting Republican fingerprints on any tax hike proposal would undermine the GOP because it would serve to alienate Republicans from its base.
The commission, he said, also gives cover for Democrats running for re-election to deflect criticism for the over $1.7 trillion that Democrats have added to the national debt since Obama took office.
“If they get asked where they stand on the deficit, Democrats will be able to say, ‘I support the commission,’” Norquist said.
Although Democrats crowed about the lack of fiscal restraint during the last several Republican Congresses while they were in the minority, a 2007 report by the National Taxpayers Union found Democrats proposed $1.58 trillion in new spending in the House during their first year with the majority and $958 billion in the Senate. Democrats also spent $21 billion beyond what the Bush administration had proposed in discretionary spending when they pushed through their budget for the 2008 fiscal year in May 2007.
“Notice they are calling this a deficit reduction commission, not a spending reduction commission,” Let Freedom Ring President Colin Hanna said. “That is both telling and important because it is not an effort to find a bipartisan solution.
“But rather it is an effort to find political cover for the president by hoping to rope in some Republican votes, so he can say a) there is no way to reduce the deficit without raising taxes, and b) to say it was a bipartisan commission that recommended it.”
Hanna said the fact Obama gets to name what Republicans get named to the commission “smells.”
The Washington Post reported Monday that Obama has placed Republican Honeywell CEO David M. Cote into consideration for the panel. Cote appeared alongside Obama shortly after he came into office last year to show his support for the $787 billion stimulus, which conservative Republicans universally opposed.
SEIU chief Andrew Stern and former Clinton economic adviser Alice Rivlin have also been suggested as panel members.
Pennsylvania Democratic Rep. Joe Sestak told Newsmax he supports the commission and defends his party’s record since coming to power in 2007, saying the Bush administration had proposed $2.7 trillion in his 2008 budget proposal compared with the $2.4 trillion in the Democrats’ final budget.
Sestak says he would like to see recommendations such as the reinstitution of the PAYGO rule, which requires balancing all appropriations with available funds rather than through borrowing. The rule started lapsing during the late 1990s when Bill Clinton and the Republican leadership began approving increases in discretionary spending above the statutory limit in response to the first budgetary surpluses since 1969. It finally disappeared in 2002.
The congressman wants to see several tax loopholes closed ̶ such as those for oil companies U.S. corporations with offshore operations ̶ to increase revenue and reduce the deficit. He also backs allowing the Bush tax cuts to expire.
“In 1993 under Bill Clinton the top tax rate was increased to 39 percent and 23 million jobs were created over eight years, but under the Bush administration we had 0 net jobs, which shows trickle-down economics doesn’t work,” Sestak said.
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