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Vote in Congress Unlikely as Deficit Panel Hits Gridlock

Tuesday, 30 Nov 2010 11:09 AM

A presidential commission on balancing the U.S. budget likely will fail Wednesday to secure enough support for its deficit-cutting plan to trigger a congressional vote on it, aides and analysts said.

With just a day left before it releases the plan, the commission's co-chairmen were still scrambling to nail down 14 votes among the commission's 18 members — a super-majority threshold called for when the panel was created in February.

"We do not think that the commission's report will get 14 votes," said Brian Gardner, a Washington policy analyst at the investment firm of Keefe Bruyette & Woods.

After months of meetings and debate, the commission's work has painted a harsh picture of the fiscal choices ahead for the United States, while also showing starkly how difficult it is to achieve bipartisan consensus on facing up to them.

The commission will hold a news conference Tuesday led by its co-chairmen, who released a draft plan on Nov. 10 that urged spending and benefit cuts and a tax overhaul to reduce the deficit to 2.2 percent of gross domestic product by 2015.

Working from that draft, the co-chairmen — former Republican Senator Alan Simpson and Erskine Bowles, former chief of staff to Democratic President Bill Clinton — have sought a compromise acceptable to 12 other commission members.

The shape of their work so far may emerge at the news conference, but the full details were likely to remain in flux until the panel's final meeting Wednesday, aides said.

The $1.3-trillion deficit, near levels not seen since World War II, adds annually to the fast-rising national debt. Voters vented their concerns about Washington's red ink earlier this month, while financial markets have registered little worry.

Investors continue to pour money into U.S. Treasury bonds. With another sovereign debt crisis — this time in Ireland — rocking Europe, U.S. debt still looks like the world's safest capital haven, though budget hawks warn this could change quickly if markets lose faith in U.S. creditworthiness.

14 VOTE THRESHOLD

Fourteen members of the presidential commission must back the final plan to bring about a congressional vote on it. That could still happen, but there was widespread skepticism.

Three senior congressional aides — two Democrats and a Republican — said they did not expect 14 votes in support. Others downplayed the importance of crossing the super-majority hurdle.

"I don't think 14 (votes) matters," said Maya MacGuineas, fiscal policy director at the New America Foundation, a think tank. "A credible large-scale plan that receives some amount of bipartisan support will be the critical first step on ... switching from the period of 'deficits don't matter' to 'how are we going to fix the deficit?"'

The National Commission on Fiscal Responsibility and Reform, the panel's formal name, was set up by President Barack Obama to find ways to balance the budget, excluding interest payments on the debt, by 2015 and "meaningfully improve the long-run fiscal outlook."

Obama underscored his deficit concern Monday by calling for a two-year freeze on civilian U.S. federal worker pay. He was expected to meet with congressional leaders Tuesday to discuss tax issues holding center stage in Congress through the end of the year. No substantive legislative action is expected this year on the deficit.

Whether Congress tackles it next year will depend in part on the Bowles-Simpson commission's result. That will be decided not just by how many, but whose votes back the plan, said Michael Linden, associate director for tax and budget policy at the Center for American Progress, a think tank.

POWERFUL LAWMAKERS ON PANEL

The commission has six members who are not in Congress and 12 who are, including powerful Senate Budget Committee Chairman Kent Conrad and Senate Finance Committee Chairman Max Baucus, both Democrats. Republican Representative Dave Camp, expected to be the next chairman of the tax-writing House of Representatives Ways and Means Committee, is also a member.

"I could imagine a scenario in which they get 11 or 12 votes," Linden said. "If they do that with, say, all six non-elected members and three Republicans and three Democrats, that could be pretty powerful. If they get only seven or eight (votes), I think it will be less influential."

The debt is projected to rise in fiscal 2011 to 68.6 percent of gross domestic product. That level would surpass Britain's projected debt-to-GDP ratio of 61.9 percent, but still be well below France's ratio of 86.5 percent.

Greece, hammered earlier this year by bond markets, is struggling to tame a debt load forecast at 139.4 percent of GDP next year, while Japan's debt is expected to top 235 percent of GDP for 2011, said International Monetary Fund forecasts.

Expectations for the commission have always been low, but some analysts said it may have long-term political meaning.

"The commission does underline a grim sense in Washington that difficult choices are coming next year," said James Lucier and Robert Kaminski, policy analysts for advisory firm Capital Alpha Partners, in a research note.

© 2017 Thomson/Reuters. All rights reserved.

 
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A presidential commission on balancing the U.S. budget likely will fail Wednesday to secure enough support for its deficit-cutting plan to trigger a congressional vote on it, aides and analysts said. With just a day left before it releases the plan, the commission's...
deficit,panel,us,obama
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2010-09-30
Tuesday, 30 Nov 2010 11:09 AM
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