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Senate Rejects Obama Deficit Commission

Tuesday, 26 January 2010 01:46 PM

The Senate Tuesday rejected a plan backed by President Barack Obama to create a bipartisan task force to tackle the federal deficit this year despite glaring new figures showing the enormity of the red-ink threat.

The special deficit panel would have attempted to produce a plan combining tax cuts and spending curbs that would have been voted on after the midterm elections. The measure went down because anti-tax Republicans joined with Democrats who were wary of being railroaded into cutting Social Security and Medicare.

The Senate vote to kill the deficit task force came just hours after the nonpartisan Congressional Budget Office predicted a $1.35 trillion deficit for this year as the economy continues to slowly recover from the recession.

"Yet another indication that Congress is more concerned with the next election than the next generation," said Sen. Judd Gregg, R-N.H., a sponsor of the plan.

The budget deficits facing Obama and Congress are large and intractable, and the CBO prediction for 2010 is roughly equal to last year's record $1.4 trillion ocean of red ink. That means the government is borrowing to cover 40 percent of the cost of its programs.

The report predicts a sluggish economic recovery and continued high unemployment — which presages big political problems for President Barack Obama and his Democratic allies heading into the midterm elections.

The report sees unemployment averaging 10.1 percent this year as the economy grows by just over 2 percent. It would grow only slightly more next year with an unemployment rate of 9.5 percent.

"CBO expects that the pace of economic recovery will be slow," said agency chief Douglas Elmendorf.

The latest estimates also project that the deficit will drop to $980 billion next year and $480 billion in five years — but only if a host of tax cuts enacted under President George W. Bush are allowed to expire. Most budget experts see deficits nearing or exceeding $1 trillion each year over the next decade once tax cuts and other policies are factored in.

It's a sobering reminder of the fundamental imbalance of the federal government's budget that comes just days before Obama's Feb. 1 budget submission. The White House says Obama will propose a three-year freeze on domestic agency budgets, though the savings would barely make a dent. It hasn't said whether Obama will proposes tax hikes or cuts to spiraling benefit programs such as Medicare, Medicaid and Social Security.

The 2010 deficit figure is in line with previous estimates and would be less, marginally, than last year's $1.4 trillion shortfall. But plans afoot on Capitol Hill for a new jobs bill and a coming Obama request for war funds would add to the total.

The spending freeze, expected to be proposed by Obama during the State of the Union address on Wednesday, would apply to a relatively small portion of the federal budget, affecting a $477 billion pot of money available for domestic agencies whose budgets are approved by Congress each year. Some of those agencies could get increases, others would have to face cuts; such programs got an almost 10 percent increase this year. The federal budget total was $3.5 trillion.

The freeze on so-called discretionary programs would have only a modest impact on the deficit. The steps needed to really tackle such huge deficits include tax increases and curbs on benefit programs like Medicare, Medicaid and Social Security.

That was the idea behind the Obama-backed plan to pass a law to create a special task force to come up with a plan to curb the spiraling budget deficit. Now, Obama may create a weaker version by a presidential order. But unlike the plan rejected Tuesday, there's no way to force a Senate vote.

Supporters actually garnered 53 votes for the plan co-sponsored by Gregg and Budget Committee Chairman Kent Conrad, D-N.D. But 60 votes were required under special floor rules. Thirty-six Democrats and independent Joe Lieberman of Connecticut voted for the plan as did 16 Republicans.

The task force was rejected after the powerful seniors lobby, led by AARP, objected to a potential fast-track debate of cuts to Social Security and Medicare. Anti-tax activists and GOP-friendly editorial pages pressed Republicans to oppose it. It would have tried to reveal a deficit reduction blueprint after the November elections for a vote before the new Congress convenes.

The plan was offered as an amendment to a deeply unpopular bill to permit the government to borrow an additional $1.9 trillion to finance its operations and prevent a first-ever default on U.S. obligations.


On the Net:

Congressional Budget Office: http://cbo.gov/

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The Senate Tuesday rejected a plan backed by President Barack Obama to create a bipartisan task force to tackle the federal deficit this year despite glaring new figures showing the enormity of the red-ink threat.The special deficit panel would have attempted to produce a...
Tuesday, 26 January 2010 01:46 PM
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