Panels tackling deficit, but doubts remain that consensus can be forged

Nov. 3 (Bloomberg) -- David Stockman, a former budget director in the Reagan administration, talks about about the outlook for the U.S. economy and tax policy following yesterday's midterm election. Stockman speaks with Erik Schatzker and Deidre Bolton on Bloomberg Television's "Inside Track." (Source: Bloomberg)
By Lori Montgomery
Washington Post Staff Writer
Tuesday, November 9, 2010; 6:59 PM

After a political campaign focused heavily on the dangers of the mounting national debt, some of the best minds in Washington are about to roll out recommendations for bringing government borrowing under control.

Three separate commissions stocked with budget experts from both parties plan to issue reports over the next four weeks, culminating with the president's Commission on Fiscal Responsibility and Reform on Dec. 1.

Despite promises that Congress could vote this year on a deficit-reduction plan, neither resurgent Republicans nor disheartened Democrats are holding out much hope that Obama's commission can reach agreement on a strategy for addressing one of the public's top economic priorities. Nor are they optimistic that lawmakers facing a showdown over taxes will have the stomach to tackle the deficit.

"I hope that happens, but you've got to think that's going to be kind of tough," said Sen. Evan Bayh (D-Ind.), an advocate of balanced budgets who is retiring at the end of the year. More likely, Bayh said, is that lawmakers will put off consideration of any big ideas on the deficit until next spring, when Congress will have to raise the legal limit on government borrowing above the current cap of $14.3 trillion.

"That will be a key moment to adopt some fiscally responsible steps," Bayh said. "Many people will balk at extension of the debt limit. So how do you get them to the table? That vote provides the leverage for getting something done."

In interviews, commission members from both parties expressed doubts about the panel's ability to forge a consensus that could be immediately considered by Congress. "It's hard. Very hard," Sen. Kent Conrad (D-N.D.), a commission member and chairman of the Senate Budget Committee, said Tuesday.

But Conrad said he "remains hopeful." And he suggested that he may try to tie the commission's recommendations to any legislation in the lame-duck session that seeks to extend Bush administration tax cuts past their Dec. 31 expiration. Conrad argued that it would make more sense to approve a temporary extension of the tax cuts if there were also agreement on a plan to rewrite the nation's complicated and inefficient tax code when the Bush cuts expire in two years.

"All these things are connected," he said.

Advertising push

Conrad and Bayh spoke during an event Tuesday where former investment banker and longtime deficit hawk Peter G. Peterson kicked off the fiscal commission season with a $6 million push to galvanize public opinion and spur lawmakers to action. The effort features a national ad campaign that lampoons politicians who demagogue the debt without embracing the painful tax hikes and spending cuts that Peterson said will be required to rebalance the federal budget after two years of record deficits.

The ads, which are slated to air during the Sunday talk shows and on national cable networks, feature fictional 2012 presidential candidate "Hugh Jidette" campaigning on a pledge to "continue to ignore our spiraling debt. And your kids can deal with it later!"

"As president, I promise your taxes will help build roads, bridges and schools," Jidette says. "Oh, not here. Overseas. I'll keep using your taxes to pay over $100 billion a year in interest to foreign lenders."

Hours after Peterson screened his ads for reporters, the Pew Economic Policy Group made a bipartisan pitch to reform Social Security, which is forecast to worsen future deficits unless taxes are raised or benefits are reduced. The Capitol Hill event featured Democrat Robert Greenstein, executive director of the Center on Budget and Policy Priorities, and Republican Charles Blahous, a newly appointed public trustee for Social Security and Medicare who co-authored a paper agreeing that the Social Security shortfall is real and that the safety net will fray unless policymakers act quickly to fix it.

Recommendations due

The cavalcade of recommendations is set to continue Wednesday, when the joint Peterson-Pew Commission on Budget Reform plans to release its report, "Getting Back in the Black," a project helmed by former congressmen Bill Frenzel (R-Minn.), Tim Penny (D-Minn.) and Charles Stenholm (D-Tex.). The commission is comprised of a host of budget luminaries, including almost all the former directors of the Congressional Budget Office, and has developed a detailed plan to stabilize the debt at 60 percent of gross domestic product.

Another bipartisan panel led by former Republican senator Pete V. Domenici (N.M.) and Clinton budget director Alice Rivlin (the only person to sit on all three commissions) will follow with a report next week.

Meanwhile, the 18 members of the president's commission - which includes a dozen sitting lawmakers - plan to gather Wednesday for their first post-election session to receive official cost estimates for a range of ideas up for discussion.

Those ideas include increasing the retirement age, which is currently set to rise to 67 for people born after 1960; cutting discretionary spending, including at the Pentagon; and trimming some of the most expensive - and popular - federal tax breaks, such as deductions for home mortgage interest, employer-provided health care and charitable contributions. The commission is also considering budget-process overhauls, such as annual caps on discretionary spending.

"It's unclear where we're going to go," commission member Rep. Paul D. Ryan (R-Wis.), who is in line to chair the House Budget Committee, said on Fox News Sunday. "But I don't think you will see a big grand bargain" to raise taxes, cut entitlement spending and fix the nation's budget problems.

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