Tags: Deficit | Panel | 3.8 Trillion | Plan | Brink | Rejection

Deficit Panel’s $3.8 Trillion Plan on Brink of Rejection

Friday, 03 December 2010 07:09 AM

A presidential commission’s $3.8 trillion debt-cutting plan is set to be rejected after five members from both political parties said they would oppose its mix of tax increases and cuts in programs such as Social Security and Medicare.

The commission appointed by President Barack Obama, scheduled to vote today, needs approval from 14 of 18 members to forward the proposal to Congress for consideration.

The recommendations “paint a big red target on rural America,” Senator Max Baucus, a Montana Democrat and chairman of the Finance Committee, said in a statement yesterday. While reducing the deficit is “imperative,” he said, plans to increase the gas tax “would hurt folks in rural states like Montana where we often have to travel long distances.”

Also opposing the plan are Democratic Representative Jan Schakowsky of Illinois and Republican Representatives Paul Ryan of Wisconsin and Dave Camp of Michigan, the incoming House Ways and Means Committee chairman. Andy Stern, former president of the Service Employees International Union, also will vote no, said his spokeswoman, Christine Bonanno.

The proposal by panel co-chairmen Erskine Bowles and Alan Simpson would increase taxes $1 trillion by 2020 by scaling back or eliminating hundreds of tax deductions, exclusions and credits, such as those letting homeowners write off interest on their mortgage payments.

It would cut Social Security benefits, raise the gas tax by 15 cents, reduce discretionary spending by $1.6 trillion and cut Medicare by more than $400 billion. The plan would reduce the annual deficit — $1.3 trillion this year — to about $400 billion from 2015, and would start reducing the national debt.

‘Reduce Our Federal Debt’

Illinois Senator Dick Durbin, the chamber’s second-ranking Democrat, said he would vote for the plan. In a Chicago Tribune op-ed article, he said it “is certainly not the plan I would have written. But it will help put Americans back to work and it will reduce our federal debt dramatically.”

Similarly, Republican Senators Tom Coburn of Oklahoma and Mike Crapo of Idaho said that while they didn’t like many elements, they would support the proposal because the nation’s fiscal challenges must be addressed. That brought the number of commission members backing the plan to 10.

“We have to start somewhere — and it can’t be all my way,” Coburn told reporters.

Crapo said, “If we take no action, we could see a collapse in the value of the dollar, hyperinflation or consequences” that would force Congress to “take actions that are far more serious and far more painful than anything in this proposal.”

Gregg, Conrad

Others supporting the proposal are Senator Judd Gregg, a New Hampshire Republican; Senator Kent Conrad, a North Dakota Democrat; David Cote, chairman of Honeywell International Inc.; Ann Fudge, former chief executive officer of Young & Rubicam Inc.; former Congressional Budget Office Director Alice Rivlin; and co-chairmen Bowles, a former chief of staff to President Bill Clinton, and Simpson, a former Republican senator from Wyoming.

Conrad said in a Bloomberg Television interview yesterday that he didn’t think there were enough votes to approve the plan. “I frankly never thought we’d get 14,” he said.

Baucus said that he opposed cuts to farm subsidies and that reductions in Social Security and Medicare would disproportionately hurt rural states because they have larger numbers of older residents.

Representative Jeb Hensarling, a Texas Republican, who said yesterday he was leaning against the proposal, said it “does not address health care in a meaningful way.”

Camp, in a statement, said the proposal “fails to address the increased health-care spending that would result from the new health-care law.” He also said he opposes plans to raise taxes.

“You cannot fix this problem without taking on health care,” Ryan told reporters. The plan “doesn’t even take a step in the right direction. It takes many steps in the wrong direction from my perspective.”

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A presidential commission s $3.8 trillion debt-cutting plan is set to be rejected after five members from both political parties said they would oppose its mix of tax increases and cuts in programs such as Social Security and Medicare.The commission appointed by President...
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Friday, 03 December 2010 07:09 AM
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