White House, Democratic lawmakers cut deal on deficit commission

By Lori Montgomery
Washington Post Staff Writer
Wednesday, January 20, 2010

Faced with growing alarm over the nation's soaring debt, the White House and congressional Democrats tentatively agreed Tuesday to create an independent budget commission and to put its recommendations for fiscal solvency to a vote in Congress by the end of this year.

Under the agreement, President Obama would issue an executive order to create an 18-member panel that would be granted broad authority to propose changes in the tax code and in the massive federal entitlement programs -- including Medicare, Medicaid and Social Security -- that threaten to drive the nation's debt to levels not seen since World War II.

The accord comes a week before Obama is scheduled to deliver his first State of the Union address to a nation increasingly concerned about his stewardship of the economy and the federal budget. After a year in which he advocated spending hundreds of billions of dollars on a huge economic stimulus package and a far-reaching overhaul of the health-care system, Obama has pledged to redouble his effort to rein in record budget deficits even as he has come under withering Republican attack.

The commission would deliver its recommendations after this fall's congressional elections, postponing potentially painful decisions about the nation's fiscal future until after Democrats face the voters. But if the commission approves a deficit-reduction plan, Congress would have to act on it quickly under the agreement, forged late Tuesday in a meeting with Vice President Biden, White House budget director Peter R. Orszag, and Democratic lawmakers led by Senate Majority Leader Harry M. Reid (Nev.), House Speaker Nancy Pelosi (D-Calif.) and House Majority Leader Steny H. Hoyer (Md.).

'This is essential'

Senate Budget Committee Chairman Kent Conrad (D-N.D.), who has long advocated creation of an independent budget panel, called the agreement an "understanding in concept" that holds the promise of at last addressing the nation's most wrenching budget problems.

"This goes to the question of the country's credibility with managing its own finances. This is essential for the nation," Conrad said.

The commission is likely to form the centerpiece of Democrats' efforts to reduce projected budget deficits, which have soared into record territory in the aftermath of the worst recession in a generation. Government spending to bail out the troubled financial sector and to stimulate economic activity have combined with sagging tax collections to push last year's budget deficit to a record $1.4 trillion. The budget gap is projected to be just as large this year and to hover close to $1 trillion a year for much of the next decade.

Deficit spending, in turn, has caused the nation's accumulated debt to swell to dangerous levels. Last month, Congress voted to increase the legal debt limit to $12.4 trillion, a record figure that the Treasury expects to exceed early this year. The deal on the budget commission clears the way for Congress to approve an even larger increase in the legal limit on borrowing, to well over $13 trillion, a figure that Democrats hope will see the Treasury through the rest of 2010.

The Senate is expected to open debate Wednesday on the debt limit. Conrad and other Senate moderates had threatened to oppose a significant increase without a budget commission. Conrad plans to meet today with the group of about a dozen senators to review the agreement.

The presidentially appointed commission would be a fallback if the Senate, as expected, does not vote to create a budget commission as part of the debt-limit legislation. House leaders are insisting, however, that they will not go along with the commission's creation unless the Senate does approve stringent pay-as-you-go budget rules, an outcome that is far from certain. Such rules, which helped produce budget surpluses under President Bill Clinton in the late 1990s, bar lawmakers from approving legislation that increases the deficit.

For weeks, Biden has been moderating talks on the commission, but progress was stymied by the insistence of Conrad and like-minded lawmakers that a presidentially appointed commission would lack the authority to force action in Congress. The breakthrough Tuesday was an agreement by House leaders to bring the commission's recommendations to a vote, though Conrad said he is still waiting to see that commitment in writing.

House Budget Committee Chairman John M. Spratt Jr. (D-S.C.), a participant in the talks, said the deal calls for both chambers to vote on any recommendations exactly as promulgated, though lawmakers could also vote to amend them.

Skeptics in the GOP

Republican commission advocates remain skeptical that a presidentially appointed panel would have the clout to tackle the nation's toughest fiscal problems. Sen. Judd Gregg (R-N.H.), a sponsor with Conrad of legislation to create a budget commission by law, called a presidentially appointed panel "a fraud" designed to do little more than give Democrats political cover.

"It's a fraud among anyone interested in fiscal responsibility to claim an executive order could structure something that would actually lead to action," Gregg said.

Some Democrats, particularly in the House, where leaders have long resisted relinquishing their authority over taxes and spending, are also less than optimistic. Under the agreement, the commission would have 18 members, including six lawmakers appointed by congressional Democrats and six lawmakers appointed by congressional Republicans. Obama would appoint six others, only four of whom could be Democrats.

Fourteen commission members would have to agree on any deficit-reduction plan, a prospect that skeptics called a recipe for gridlock because action would depend on the support of at least two Republicans for a plan that is sure to include tax increases. Meanwhile, many influential interest groups -- including some unions and AARP -- have lined up in opposition to giving an outside commission power to cut federal spending and are likely to pressure Democrats to resist sharp budget cuts.

The White House declined Tuesday to comment on the commission agreement, though Orszag spokesman Kenneth Baer acknowledged in a statement that "the administration has been discussing, with members of Congress and others, a range of ideas about how to put the nation back on a sustainable fiscal path."

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