Congressional debt panel told to be bold or risk economic disaster

McClatchy NewspapersNovember 1, 2011 

WASHINGTON — Experts from recent bipartisan debt-reduction commissions gave Congress' debt supercommittee stark, sobering warnings Tuesday about imminent economic disaster unless lawmakers act quickly and boldly to cut federal debt sharply.

Democrats in Congress are reluctant to back dramatic changes in government health care programs. Republicans insist that taxes must not go up. If those unyielding positions persist — and so far, they have _both parties "will be equally complicit in bringing the nation close to the fiscal brink," said Pete Domenici, a former Republican senator from New Mexico who once headed the Senate Budget Committee. "I hope you heard that."

Another expert voiced doubt about prospects for consensus.

"I have great respect for each of you individually, but collectively, I'm worried you're going to fail, fail the country," said Erskine Bowles, the former Clinton White House chief of staff who headed a 2010 bipartisan deficit reduction commission.

However, he later added: "I think you can get this done."

But as Bowles and three other bipartisan-panel chairmen took questions Tuesday from the Joint Committee on Deficit Reduction, it was clear that the current panel's lawmakers were largely stuck, at least publicly, on partisan remedies.

The 12-member committee, six Democrats and six Republicans, has 22 more days to devise a plan to save at least $1.2 trillion over the next decade. If no plan is adopted, automatic spending cuts totaling about $1 trillion over nine years will go into effect in 2013.

Co-chairman Rep. Jeb Hensarling, R-Texas, offered the Republican Party line that changes need to be made in entitlement programs, such as Medicare.

"What could not be clearer is that unless we offer fundamental and structural reforms to our nation's entitlement programs, especially health care, we will not only end up failing in our duty," he said, "we may fail our nation as well."

"Is there a consensus among the panel that the number one challenge we face in our structural debt is health care?" Hensarling asked of the witnesses. None disagreed.

Democrats emphasize higher taxes on the wealthy as a key way to pare deficits.

Co-chairwoman Sen. Patty Murray, D-Wash., said Democrats are ready to deal, but she said that "concessions would only be made, and only considered, in the context of a balanced deal that doesn't just fall on the middle class and most vulnerable Americans."

Any deal, she said, would be one "that requires big corporations and the wealthiest among us to share in the sacrifices."

The hearing featured few new ideas but lots of fresh pressure from Washington wise men and women on the lawmakers to legislate.

"You all know what you have to do in your gut," said Alan Simpson, a former Republican senator from Wyoming who, along with Bowles, headed the panel that recommended ways last year to shave $4 trillion from deficits over 10 years.

Also speaking were the co-heads of a separate task force — Domenici and Alice Rivlin, a former Federal Reserve Board vice chair and Clinton administration budget director.

Bowles methodically laid out where change is needed: A health care system where "outcomes don't match the outlays," defense and taxes.

"I believe we have the most ineffective, inefficient, anti-competitive tax system that man could dream up," he said.

In December, the Simpson-Bowles panel, formally called the National Commission on Fiscal Responsibility and Reform, urged a wide range of politically volatile proposals. Among them: Deep cuts in most government spending, overhauling the tax code, slashing defense spending and cutting long-term Social Security benefits.

The report urged collapsing today's six individual income tax rates into three brackets of 8 percent for the lowest incomes, 14 percent for middle incomes and 23 percent for the highest incomes. The top rate today is 35 percent. It also called for some popular tax breaks to be limited or ended.

Bowles said Tuesday that from reports he's seen, the two parties could agree on about $300 billion in discretionary spending, such as education and energy programs; $600 billion in health care savings; $800 billion in new revenues; $500 billion in other savings and $400 billion in interest savings. Add to that the $1.3 trillion already cut in other legislation this year, and it adds up to about $3.9 trillion.

The Domenici-Rivlin report, issued in November, aimed to save nearly $6 trillion by 2020. A revised version presented Tuesday would establish individual tax rates of 15 percent and 28 percent, and also dramatically change or end many deductions.

But when the four chairmen were questioned Tuesday, lawmakers stuck largely to partisan themes.

What would happen to lower-income people if deficit reduction were achieved only through spending cuts, asked Rep. Jim Clyburn, D-S.C.

"I've always thought it's got to be some combination of revenues and cuts," Bowles said.

But the experts' larger message was more stark. Without a big, bold deal, Bowles warned, "People would look at this country and say, 'You guys can't govern."'

ON THE WEB:

Simpson-Bowles report

Domenici-Rivlin report

Supercommittee home page

MORE FROM McCLATCHY:

Deficit-reduction panel offers bitter medicine

Debt-reduction 'supercommittee' starts work with a tone of comity

'Supercommittee' hears grim economic, budget outlook from CBO

Debt panel to meet in public, but few signs of progress yet

For more McClatchy politics coverage visit Planet Washington

McClatchy Newspapers 2011

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