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Deficit panel pursues bold array of fixes

| Saturday, Nov. 27, 2010

President Obama's deficit reduction commission sparked fierce national debate with its draft report calling for sweeping spending cuts and tax increases.

It is up to co-chairmen Erskine Bowles and former Sen. Alan Simpson, R-Wyoming, to persuade at least 14 people on the 18-member National Commission on Fiscal Responsibility and Reform to approve the report by Dec. 1, and to present the plan to Congress. The commission of six presidential appointees and 12 congressional members will meet again Tuesday.

Suggestions in the draft include reducing defense expenditures, cutting the federal work force by 10 percent, raising the gasoline tax to pay for transportation needs, lowering income tax rates for people and corporations while doing away with loopholes, slashing Medicare expenditures and reworking Social Security.

The 50-page report drew criticism from liberals and conservatives alike, even though it purports to trim the deficit by $3.8 trillion by 2020.

David Abshire, a former adviser to President Reagan and NATO ambassador who heads the Center for the Study of the Presidency and Congress, commended Simpson and Bowles on their strategy.

"At first I was shocked, and then I saluted them. ... They were fearful of losing the votes they needed to approve it, so they socked it to us. We've got some courage in Simpson and Bowles. They're standing tall like the Washington Monument, and people don't like it," Abshire said.

Bowles, who served as President Clinton's White House chief of staff, and Simpson laid out their version of painful trade-offs this month to curtail spending that pushed the national debt to $13.9 trillion. Nothing in the report can become law without the support of Congress and Obama.

Simpson predicted the recommendations will spark "brutal" battles in Congress.

"We have harpooned every whale in the ocean," he quipped last month at a news conference.

Indeed, interest groups and political leaders quickly lined up to complain.

Real estate agents and builders objected to eliminating the tax deduction for mortgages in excess of $500,000, second homes and home equity loans.

House Speaker Nancy Pelosi, D-Calif., called the recommendations to reduce Social Security benefits and raise the retirement age "unacceptable." Former House Speaker Newt Gingrich, R-Ga., attacked the commission's recommendations as "job killers." Grover Norquist of Americans for Tax Reform skewered the report for containing $1 trillion in tax increases over a decade.

But people reacted warmly to some proposals. Last week, a Rasmussen poll found two-thirds of Americans support reducing the federal work force.

Bowles, 66, who leads the University of North Carolina system, and Simpson, 79, a blunt-talking Westerner, initially predicted the recommendations would require sacrifice across all income levels and ideological lines.

"This one's for my grandkids," Simpson has said.

A week after Bowles and Simpson released their proposal, the Bipartisan Policy Center released a report that suggested even more sweeping measures. That report was written by a group of scholars and former government officials.

The panel, chaired by former Sen. Pete Domenici, R-N.M., and former Congressional Budget Office Director Alice Rivlin, a Democrat, purports to save $5.9 trillion. It calls for domestic and defense spending freezes and major adjustments to Medicare and Social Security.

Both the Bipartisan Policy Center report and the Deficit Commission draft report urged caution against imposing their plans on a slowly recovering economy too soon. The Bowles-Simpson report suggested holding off until 2012. The Rivlin-Domenici report suggested a payroll tax holiday until 2012 in an effort to spur job creation.

Abshire, whose policy group recommended creating a presidential commission to address the growing national debt, is encouraged that the two reports point in the same direction.

What remains, he said, is for Obama to seize the initiative to rally support for recommendations that will require shared sacrifice. He is disappointed that the president declined to comment on the Bowles-Simpson draft.

"He should have said, 'This is a courageous move, and we'll all salute it.' He should have said, 'These are two people the Founding Fathers would have been proud of,'" Abshire said.

Building support will require a pivot in the Obama administration's strategy, Abshire said. He suggested the president call congressional leaders into the Oval Office to negotiate support.

The need for vigorous leadership and public support cannot be underestimated, Abshire said.

"We've got to have a public compact, not a Mayflower Compact, but a public compact that comes out of these two commissions. And the president must move rapidly," he said.

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