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Next Steps Unclear for Commission’s Drastic Debt-Reduction Plan

November 10, 2010 at 6:39 PM EST
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A bipartisan deficit commission appointed by President Obama issued a draft proposal of drastic spending cuts Wednesday, ranging from changes in Social Security to tax policy. Lori Montgomery of the Washington Post gives details on what the panel leaders are calling "painful" cuts and how the ideas have been received.
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JIM LEHRER: The two chairmen of the commission on cutting the federal deficit laid out a long list of recommendations today. They ranged from raising the Social Security retirement age to 69, to eliminating the mortgage interest deduction on income taxes.

Republican Alan Simpson, a former Wyoming senator, teamed with Democrat Erskine Bowles, who was chief of staff to President Clinton.

Bowles said the plan is a starting point.

ERSKINE BOWLES, co-chairman, National Commission on Fiscal Responsibility And Reform: Senator Simpson and I put a — what I think is a strong, balanced proposal out there to deal with what I think is the most predictable economic crisis that this country has ever faced.

Every single member of Congress knows that the path we’re on today is not sustainable and that, if we don’t bring these deficits down and eventually get to balance, you know, we are headed for disaster.

JIM LEHRER: And to Lori Montgomery, who has been covering this story for The Washington Post. Lori, welcome.

LORI MONTGOMERY, The Washington Post: Thank you for having me.

JIM LEHRER: What few words would you use to characterize the Bowles-Simpson proposal?

LORI MONTGOMERY: Well, I think, for one thing, it was a big surprise to just about everybody that they put out such a sweeping and comprehensive proposal.

I mean, I talked to members of the commission who, as late as last night, were expecting to see, you know, sort of a list of options with numbers beside them.

I mean, this is a dramatic, stark, and bold effort to actually balance the budget. And I’m not sure anyone was expecting that.

JIM LEHRER: What are the — to you, at least, going through it, what are the most stark, the starkest?

LORI MONTGOMERY: Well, the idea that they would completely wipe out the tax deductions that are known as tax expenditures — these things are worth more than $100 billion a year. As you mentioned, they include things like the mortgage interest deduction, the tax-free treatment of employer-provided health care.

I mean, there’s stuff in here that touches everyone. And they would just wipe it out, in exchange for some lower tax rates, but they would suck some more money out of the tax code. Raising the retirement age, we were sort of expecting that. But there are a number of other reforms that they are proposing that would also serve to lower benefits for wealthier retirees. That is going to be very controversial.

And they have got more than $200 billion a year in discretionary spending cuts, which is something like a 20 percent reduction in Pentagon and other agency budgets.

JIM LEHRER: Now, I noticed that you mentioned the Pentagon, 15 percent cut in defense spending. And they even outlined, if I read this correctly, some specific weapons systems that should be eliminated.

LORI MONTGOMERY: Well, that’s right. And what’s been surprising to many people is that there are some Republicans that are willing to embrace this idea.

And if they’re going to sell Social Security cuts to the liberal Democrats, who right now are screaming the loudest about this plan, they are going to have to have some serious reductions in military spending in there, too.

JIM LEHRER: Give us a feel for the reaction. There’s been a lot of it in the last couple of hours.

(LAUGHTER)

Well, Nancy Pelosi, speaker of the House, said, this is — just right off the top, is unacceptable, right?

LORI MONTGOMERY: Simply unacceptable, that’s exactly what she said.

There’s an interesting dynamic developing. I guess I should mention, first of all, that the White House also has been a little, like, well, this is just a starting point, very sort of noncommittal at this point.

But, otherwise, there’s an interesting dynamic developing, both on and off the commission. Many of the members, except for the most liberal members, the champions of Social Security, are very reluctant to outright criticize this thing.

They’re calling it a serious effort, something that they have to respect. And nobody is — I mean, nobody is for it, but nobody is totally against it either.

And then you have got some people on the outside, longtime balance-budget advocates, who are calling this thing a breakthrough. It’s like, you know: This is a serious plan. We can’t go back to pretending that, you know, eliminating ear marks is going to solve our budget problems any more.

JIM LEHRER: But, then, on the other side, there — Grover Norquist said that this was — was a secret way or a camouflaged way — of course, I’m paraphrasing — but to raise taxes. And he essentially said it’s unacceptable from his point view as well.

LORI MONTGOMERY: That’s right. They’re calling it a trillion-dollar tax increase.

But it’s interesting that these very extreme reactions are coming from the far end of the party, of each party. I think that there is a middle ground that is going to try to massage this thing, and — and could bring this whole debate back to life in a way that I think everybody was assuming it wouldn’t be resuscitated.

JIM LEHRER: All right, give us a feel now for the process. What happens next?

LORI MONTGOMERY: Well, that’s a little unclear as well. So, the deficit commission, the 18 members of the deficit commission, which includes about a dozen members of Congress, were meeting into the afternoon to go over this thing, make sure they understand it, go through all the details.

They’re going to get together again next week to begin to seriously take it apart. Everyone I spoke to said that they have got some alternative proposals that they want to offer. Bowles and Simpson said that that’s great, and they’re going to be open to taking those ideas, but, if you’re going to put something back in that increases the cost of the plan, they want to see where you’re going to pay for it.

So, you have got this sort of interesting dynamic developing, where it’s possible that a proposal could emerge that would have these deficit reduction goals intact. Now, it’s also unclear when they’re going to vote on and it how they’re going to vote on it.

They’re supposed to release the report by December 1. They haven’t said when the commission as a whole will vote on this plan, if it will vote on this plan. And some commission members were raising the point today. It’s like, well, we haven’t talked about whether or not we can take pieces of this thing and vote for that. So, even though maybe we can’t endorse the entire thing, maybe we can take, you know, a la carte, if you will, we will go for these tax reforms, we will go for these spending cuts.

JIM LEHRER: Sure. Am I correct in that — there’s 18 members of the commission. As you say, some of them are members of Congress. But it takes 14 for it to take this, whatever they finally end up with and put it on the floor or put it before Congress. Am I right about that?

LORI MONTGOMERY: That’s right. The commitment from House Speaker Pelosi and Senate Majority Leader Reid is that, if 14 of the 18 members agree to something, they will vote on it, they will put it on the floor during this Congress, which means before the end of the year.

Now, I don’t think anybody — A, it seems pretty unlikely that a plan of this magnitude could get 14 votes. Even if it did get 14 votes, they are insisting that this offer still holds. But you talk to members, they want to go home. They want to solve the Bush tax cut problem and get out of here.

I — I can’t imagine that there’s actually going to be an extended debate on raising the Social Security age before Christmas.

JIM LEHRER: So, when Erskine Bowles says this is a starting point, that’s literally true, correct?

LORI MONTGOMERY: I think that’s — I think that’s right. And what — and what people are now saying in the budget world is at least we have a credible plan for reining in the debt. At least we now can see what it would take. We have a presidential commission, the chairman of a presidential commission, saying, here’s what it would take to get there.

And, in a sense, you know, whatever happens on the Hill in the next couple of months, the ball has moved forward on the debate, and it now needs to be picked up in the president’s budget in February. It needs to be picked up in the budget resolutions that both parties will put out in March, and it needs to be picked up in the vote that will be taken on whether or not to raise our debt limit yet again, which will happen some time in the first time — the first part of next year.

JIM LEHRER: OK. Got it. Lori Montgomery, thank you very much.

LORI MONTGOMERY: Thank you.