Bipartisan agreement on balancing budget may be harder than thought

By Lori Montgomery
Washington Post Staff Writer
Tuesday, November 16, 2010; 9:58 PM

Forget about convincing Congress. The leaders of the president's fiscal commission came under fire from the panel's own members Tuesday as they struggled to forge a bipartisan consensus on an ambitious plan to balance the federal budget.

In separate appearances, two lawmakers who sit on the 18-member panel rejected major elements of the budget-cutting proposal announced by commission co-chairmen Erskine Bowles and Alan K. Simpson - offering a glimpse of how difficult it would be to win broad political support for a serious assault on rising national debt.

At a Capitol Hill news conference, Rep. Jan Schakowsky (D-Ill.) presented her own cost-cutting proposal, rejecting Social Security reductions in favor of deeper cuts at the Pentagon and higher taxes on corporations and the wealthy. Meanwhile, Rep. Dave Camp (R-Mich.), who is in line to chair the tax-writing House Ways and Means Committee, said in a speech at the nonprofit Tax Council that he would oppose any increase in the overall level of federal taxation without further spending cuts.

The push to deal with the nation's budget problems could be further complicated Wednesday when another commission member - Clinton administration budget director Alice Rivlin - is due to present a different strategy that includes ideas that are likely to be even less palatable politically, such as a big new jolt of economic stimulus and a new national sales tax.

"I don't think we know how this is going to play out," Rivlin said of the proliferation of ideas. "But I think a consensus is building that debt is a huge problem and that we've got to take major action."

Lawmakers, however, are struggling to agree on much of anything in the wake of political upheaval in the midterm elections. Democrats made no progress Tuesday in deciding the fate of an array of tax cuts that are set to expire Dec. 31. A proposed meeting at the White House for leaders of both parties to discuss a potential compromise was postponed until Nov. 30.

The White House said the meeting was delayed at the request of House Minority Leader John A. Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) "due to scheduling conflicts in organizing their caucuses."

"The meeting will happen," McConnell spokesman Don Stewart said. "Nobody pulled out."

In the House and the Senate, lawmakers have spent the past two days electing party leaders and debating organizational changes, leaving little time to focus on policy. Senate Republicans did approve a resolution banning the use of earmarks Tuesday, but the measure is not binding and some GOP senators suggested they may not play along.

On tax cuts, aides say a clear legislative path is unlikely to emerge until after the Thanksgiving break.

"It's clear that a vast majority of my caucus believes that we should protect the middle class," said Senate Majority Leader Harry M. Reid (D-Nev.). But he declined to endorse the idea of temporarily extending all the tax cuts - including provisions that benefit taxpayers who earn more than $250,000 a year - as McConnell and other senior Republicans have demanded.

"We must recognize the impact of our deficit," Reid said. "Remember, some of the people pushing the hardest for extending the tax cuts to billionaires are the same people who are are complaining about the deficit."

The deficit has, if anything, received even less attention from lawmakers. If Bowles and Simpson can win the support of 14 of their 18 members by Dec. 1, congressional leaders have vowed to put a deficit-reduction plan to a vote in the House and the Senate before the end of the year. But senior aides in both parties say the odds of bipartisan agreement are vanishingly small.

Although neither party has embraced the proposal - which would raise the retirement age, cut discretionary spending and overhaul the tax code - the loudest objections are coming from the left, which is campaigning against any cuts to Social Security benefits. Labor unions and other liberal activists are mobilizing a call-in campaign to urge lawmakers to reject the Bowles-Simpson plan, which AFL-CIO chief Richard Trumka on Tuesday called "dead in the water."

The commission pressed ahead Tuesday, agreeing to embrace a limit on discretionary spending - though it did not reach agreement on how much the government should be permitted to spend. Taxes and Social Security are up for discussion later this week.

"What's clear to me is that the era of debt-denial is over," Bowles told reporters.

Rivlin sounded a similarly optimistic note Tuesday as she and former senator Pete V. Domenici (R-N.M.) prepared to announce their own deficit-reduction plan, developed over the past year with the help of a bipartisan team of budget experts. That proposal would tackle the debt even more aggressively than the Bowles-Simpson plan, reducing deficits by nearly $6 trillion over the next decade and stabilizing borrowing at 60 percent of gross domestic product.

The plan calls for freezing domestic and military spending, and seeks to control the cost of health care by ending the tax-free treatment of employer-provided health insurance. Retirees would have higher Medicare premiums and smaller Social Security checks, though the retirement age would be unchanged.

The plan envisions an overhaul of the tax code similar to the Bowles-Simpson plan that would wipe out most existing tax breaks while lowering tax rates overall. It would throw in a new "deficit reduction sales tax" that would add 6.5 percent to the cost of many goods and services. And it would seek to spur hiring with a one-year holiday from Social Security and Medicare payroll taxes that would let workers and their employers keep an extra $650 billion next year.

Although the idea of a European-style sales tax is not popular, particularly among Republicans, Domenici said even conservative members of the group recognize that the nation's budget problems are "so bad, we better be for something."

Staff writers Shailagh Murray and Anne E. Kornblut contributed to this report.

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