Updated 9:55 a.m.
Conservative Republican Sens. Tom Coburn and Mike Crapo announced on Thursday they will support a far-ranging deficit reduction plan crafted by the co-chairmen of the president’s fiscal commission – providing an important political boost for the measure on Capitol Hill.
Coburn, of Oklahoma, and Crapo, of Idaho, are among 12 lawmakers serving on the 18-member bipartisan commission, which is set to formally vote tomorrow on the controversial package of spending cuts, tax increases and reductions in Social Security.
Corburn and Crapo said the deficit problem is too great to put off action until after the next election, and if lawmakers don’t act now they will have to face far more painful choices later. House Republican members of the commission are likely to oppose the plan because of its tax increases and failure to address their concerns about the health care reform law enacted earlier this year.
Coburn, a physician and one of the GOP’s most respected voices on spending and budget issues, signaled during the commission’s final public meeting on Wednesday that he would go along with the proposal. “This plan is a plan,” he said. “The people who have worked on it have tried to build a consensus. I have heartaches with tons of it ... But I know we have to go forward ... This is just a down payment on the real, difficult sacrifices that everybody in this country is going to have to make.”
Crapo, a member of the Budget and Finance committees, complained that the plan doesn’t go far enough in controlling spending, but said it would provide Congress with an important roadmap, and he saw nothing in the package that would prevent Congress from addressing GOP concerns about the health care law. “As I look at it, I don’t see anything in the plan that prevents more health care cost controls,” he said.
Fourteen-Vote Majority Doubtful
Bowles and Simpson have acknowledged it is unlikely they could garner a 14-vote supermajority behind their plan, but it now appears that support of a majority of the members--probably 11 in all--is in reach. Despite early predictions of sharp ideological and political rifts within the commission, many members appear to have set aside their differences to embrace the outlines of a long-term plan that some say is crucial to averting a long-term debt crisis similar to the ones plaguing Greece, Spain and other European countries.
Bowles, former President Bill Clinton’s chief of staff, and Simpson, the former Republican Senator from Wyoming, offered their package at the final public meeting of the commission on Wednesday with only minor changes from their proposal earlier this month. The controversial plan – aimed at reducing the deficit by nearly $4 trillion within a decade – includes sharp cuts in defense spending, a reduction in the federal work force, a boost in the retirement age for full Social Security benefits, and tax reforms that could cost the average taxpayer an additional $1,700 a year.
Five other commissioners have declared support for the plan: Senate Budget Committee Chairman Kent Conrad, D-N.D.; Sen. Judd Gregg, R-N.H.; David Cote, Honeywell International’s chief executive; Alice Rivlin, former Congressional Budget Office director; and Ann Fudge, former chief executive of Young & Rubicam Brands.
House Budget Committee Chairman John M. Spratt Jr., D-S.C., signaled he was strongly leaning toward supporting the proposal, while six others Republican and Democratic members put off a final decision until Friday. A few, including Republican Reps. Paul Ryan of Wisconsin and Jeb Hensarling of Texas, raised concerns about provisions of the tax proposals and what they described as major shortcomings in addressing long-term health care costs. Rep. Jan Schakowsky, a liberal Democrat from Illinois who opposes changes to Social Security and cuts in programs for the middle class, was the only panel member to openly oppose the plan.
Others staked out positions that could dramatically alter terms of the debate on Capitol Hill. Sen. Richard J. Durbin, D-Ill., one of the panel's most influential liberals, embraced a proposal to raise the retirement age to 69 in 2075, calling it "not radical" and "acceptable to me" – a rebuke to the progressive groups, labor organizations and advocates for the elderly that have criticized the idea. Durbin last night declared support for the plan.
"Borrowing 40 cents out of every dollar we spend for missiles or food stamps is unsustainable," Durbin wrote in an op-ed piece in Friday's Chicago Tribune. "When we engage in the critical decisions about our nation's future budgets, I want progressive voices at the table to argue that we must protect the most vulnerable in our society and demand fairness in budget cuts."
Hensarling , a leader of the GOP's conservative wing, said he could live with a proposal to cut military spending and increase overall federal tax collections as long as income tax rates were lowered, spending cuts were enforced and Democrats agreed to reexamine the growth of spending envisioned under the recent health care law.
Obama has yet to formally respond to the commission chairmen’s plan, and there was no immediate reaction from top leaders in Congress, including House Speaker Nancy Pelosi, D-Calif., who called an earlier plan "simply unacceptable."
Obama appointed the panel, formally known as the National Commission on Fiscal Responsibility and Reform, and ordered it to report back by Dec. 1 with a plan that addresses the long-term fiscal crisis.
The White House and Congressional Budget Office both predict that deficits will remain unsustainably high for the rest of the decade if Congress fails to make significant budget changes. President Obama’s budget plan for fiscal 2011, which includes significant changes to reduce future deficits, still projects a deficit in 2017 of $778 billion. The government’s publicly held debt would total $15.7 trillion – 74 percent of the nation’s gross domestic product. Some of Obama’s proposed changes include extending tax cuts of 2001 and 2003 for families earning less than $250,000 a year and maintaining the current income threshold for the alternative minimum tax.
The president wanted the commission to agree on a package of proposals to balance revenues and spending for everything except interest on the debt by 2015. That would still leave a projected deficit of $571 billion in 2015, according to White House estimates, but it would require either wrenching cuts in many federal programs or painful tax hikes.
Bowles and Simpson unveiled their plan shortly before Thanksgiving. Along with steep cuts in spending, the plan recommends raising taxes by nearly $1 trillion by 2020, primarily by eliminating or reducing cherished breaks such as the deduction for home mortgage interest; the tax-free treatment of employer-paid health insurance; and preferred rates for capital gains and dividends. It also calls for a 15-cent-per-gallon increase in the federal gas tax.
The top income tax rate for individuals and corporations would be lowered to 29 percent or less from 35 percent. And the report recommends a legislative trigger that would raise taxes automatically unless an overhaul was approved by 2013.
Future retirees would face significant sacrifices, including higher Medicare premiums and a later retirement age. The early retirement age would rise to 64 from 62. In a bid to address liberal concerns, Bowles and Simpson strengthened protections for workers in physically demanding jobs, who might find it difficult to delay retirement, recommending that the Social Security Administration create an exemption for up to 20 percent of new retirees.
The report, titled "The Moment of Truth," makes an array of other proposals designed to lure the support of commission members, including $50 billion in specific spending cuts championed by Coburn and endorsement of a payroll tax holiday to spur job creation, promoted by Durbin.
The final package would balance the budget more quickly than the original plan, wiping out annual deficits by 2035. And although the nation's soaring debt would continue to rise in the short term, the plan would bring it down to a more manageable 40 percent of gross domestic product over the next 25 years.