GOP leaders agree to panel on federal deficit
Friday, February 19, 2010
With the national debt soaring, Republican leaders reluctantly consented Thursday to join Democrats on a bipartisan commission to address the government's budget problems. But they continued to reject any solution that involves higher taxes, and analysts in both parties said the effort faces a dauntingly poisoned political atmosphere.
Even as he unveiled an executive order creating the panel, President Obama acknowledged that he is asking its members to attempt "the impossible." For decades, budget projections have shown that rising health-care costs and an aging population would drive the nation deeply into debt. Government spending to ease the recent recession has accelerated that process.
"The trajectory is clear, and it is disturbing," Obama said. "But the politics of dealing with chronic deficits is fraught with hard choices, and, therefore, it's treacherous to officeholders here in Washington. As a consequence, nobody has been too eager to deal with it."
Republicans say that includes Obama, who declined to offer a plan for fiscal solvency in the budget blueprint he released this month. Instead, with congressional Democrats due to face voters in November, Obama punted the problem to the bipartisan panel, formally known as the National Commission on Fiscal Responsibility and Reform, and ordered it to deliver a solution by Dec. 1, well after the fall elections.
Obama named former Clinton chief of staff Erskine B. Bowles and former Republican senator Alan K. Simpson of Wyoming -- both veterans of successful bipartisan budget accords -- to chair the panel, which Obama said is designed to "rise above partisanship."
Obama said "everything is on the table" in the quest to balance spending and tax collections by 2015, an assertion that suggests he is willing to abandon his campaign pledge not to raise taxes on the middle class.
But congressional Republicans seemed to rule out that option even before the effort gets underway. Senate Minority Leader Mitch McConnell (Ky.) and House Minority Leader John A. Boehner (Ohio) issued statements urging the panel to focus on cutting spending, not raising taxes.
"The American people are deeply concerned by the amount of money politicians in Washington have been spending and they want us to get a handle on spending without raising taxes," McConnell (R-Ky.) said. "After trillions in new and proposed spending, Americans know our problem is not that we tax too little, but that Washington spends too much -- that should be the focus of this commission."
The 18-member commission is structured to include six Republican lawmakers, six Democratic lawmakers and six presidential appointees, including Bowles and Simpson. Administration officials said Obama is likely to hold off naming the rest of his picks until McConnell and Boehner announce theirs. That could happen as soon as next week, when lawmakers return to Washington.
Fourteen of the 18 members would have to agree on any deficit-reduction plan, which means that at least two sitting GOP lawmakers would have to sign on. If that happens, House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry M. Reid (D-Nev.) have both pledged to put the panel's recommendations to a vote before the end of the year.
Pelosi and Reid are under no legal requirement to act, however, and critics in both parties have said Obama's commission may lack the power to force the parties to reach consensus on a plan that is almost certain to require deep cuts to the popular entitlement programs -- Social Security, Medicare and Medicaid -- as well as significant tax increases.
Building bipartisan consensus for such a plan would be particularly difficult in the run-up to the fall elections, when many Republicans hope to ride a wave of anti-tax, "tea party" activism back into power in Washington.
"The chances that you'll have a commission that comes up with substantial deficit reduction that this Congress enacts is close to zero," said Jim Horney, a budget expert at the left-leaning Center on Budget and Policy Priorities.
Douglas Holtz-Eakin, a senior economic adviser to Republican Sen. John McCain's 2008 presidential campaign, said, "I don't have a lot of hope."
$1.6 trillion deficit
Still, Republicans said the gravity of the nation's budget problems is forcing them at least to come to the table. The deficit is projected to approach $1.6 trillion this year, nearly 11 percent of the overall economy, the highest level since the end of World War II. And even if congressional Democrats accepted Obama's proposal to freeze non-defense discretionary spending for three years, deficits would average nearly $1 trillion for the rest of the decade. By 2020, Obama projects the national debt will have grown to more than 77 percent of the overall economy, the highest level since 1950.
"The fiscal projections for the United States are so stunning that, one way or another, reform will occur," Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, said this week at a forum organized by the bipartisan Committee for a Responsible Federal Budget. "If preemptive corrective action is not taken regarding the fiscal outlook, then the United States risks precipitating its own next crisis."
Sen. Judd Gregg (R-N.H.), who has championed a plan to create a strong deficit commission with power to force action in Congress, previously said he would refuse to serve on the weaker, presidentially appointed panel. But on Thursday, he said his opposition has softened.
"I've still got deep reservations about its viability," Gregg said. But for people who are deeply concerned about a brewing fiscal crisis, he said, the Obama panel "is the only game in town."