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Deficit Plan Dealt Setback, But Austerity Ideas to Live On

December 3, 2010 at 6:39 PM EST
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The president's deficit commission voted 11-7 Friday on a combination of spending cuts and tax increases recommended by its co-chairmen, falling short of the 14 votes needed to send the plan to Congress. Co-chair Alan Simpson still showed optimism, saying that some aspects will be picked up and implemented in future proposals.
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JEFFREY BROWN: And next: to economic policy and the nation’s debt and deficits.

More than nine months after it was created, today was the day for President Obama’s bipartisan fiscal commission to put its plan up for a vote. Here again is Judy Woodruff.

JUDY WOODRUFF: Eleven of the commission’s 18 members supported a blueprint for fiscal austerity offered by the co-chairmen. That was three short of the supermajority needed to trigger an up-or-down vote in Congress.

Still, co-chair Erskine Bowles, a former Clinton White House chief of staff, insisted the commission delivered a wakeup call to the country.

ERSKINE BOWLES, co-chairman, National Commission on Fiscal Responsibility And Reform: I think people really believe that this is the moment of truth, that the threat of these deficits are real. The solutions are absolutely going to be painful — there is no way around it — and there is no easy way out.

JUDY WOODRUFF: Republican co-chair Alan Simpson, a former Wyoming senator, had a more colorful view of the outcome.

ALAN SIMPSON, co-chairman, National Commission on Fiscal Responsibility And Reform: We took a big banana and threw it into the gorilla cage. And the gorilla has picked it up, like they do. They peel it, mash it, play with it. But they will eat some.

(LAUGHTER)

And that’s where we are right now, because — and so it is with this. Many pieces of this will be digested and nourish this country.

JUDY WOODRUFF: Those pieces included recommendations to raise the retirement age to 68 for full Social Security benefits by 2050, reduce future increases in Social Security benefits, and eliminate some tax breaks and curb others, including the child tax credit and mortgage interest deduction.

In exchange, the plan calls for corporate and individual income tax rates to be simplified and cut. Overall, the package would shave nearly $4 billion from the federal budget over the next decade. It won the surprise backing today of a key Democrat on the commission, Illinois Senator Dick Durbin.

Another yes vote, North Dakota Democratic Senator Kent Conrad, said getting 11 votes was an achievement, in view of strong opposition from the left and the right.

SEN. KENT CONRAD (D-N.D.): So, I never thought there was much prospect of getting 14 votes. But we’re going to get 11. Eleven of 18, by my math, is 60 percent — in fact, it is a little over 60 percent. So, I believe we have crossed an important hurdle here and laid out a plan that will be resurrected, because it must be.

JUDY WOODRUFF: One of the plan’s opponents agreed.

Andy Stern is a former president of the Service Employees International Union.

ANDREW STERN, former president, Service Employees International Union: The Bowles-Simpson plan got 60 percent of the votes. It deserves a vote. You know, whoever made the rule up of 14, we made it up.

JUDY WOODRUFF: In a statement, President Obama praised the commission’s work, without backing any specifics.

Instead, he said it “underscores that, to sustain growth in the medium and long term, we need to face some difficult choices to curb runaway debt.”

The president said his economic team will consider the proposal in working up a budget for the coming year.