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Deficit Panel Proposal Draws Love, Hate, Reticence

Nov 10, 2010

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Frank James

The draft plan from President Obama's blue-ribbon fiscal responsibility commission is certainly getting all kinds of reaction, good, bad and, from the White House, reticence.

Some of the hostility is certainly a measure of just how difficult it will be to put the federal government's troubled finances on a sustainable path.

A far from exhaustive list of some of the reaction so far:

Speaker Nancy Pelosi (CA):

"Our nation is facing two challenges: the need to create jobs and address our budget deficit.   Any viable proposal from the President's Fiscal Commission must strengthen our economy, but it must do so in a fair way, focusing on how we can effectively promote economic growth.

"This proposal is simply unacceptable.  Any final proposal from the Commission should do what is right for our children and grandchildren's economic security as well as for our nation's fiscal security, and it must do what is right for our seniors, who are counting on the bedrock promises of Social Security and Medicare.  And it must strengthen America's middle class families—under siege for the last decade, and unable to withstand further encroachment on their economic security."

House Republicans poised to chair committees responsible for federal spending and taxes, Paul Ryan (WI), Dave Camp (MI) and Jeb Hensarling (TX), issued a joint statement that was much more cryptic but seemed encouraging:

... This is a provocative proposal, and while we have concerns with some of their specifics, we commend the co-chairs for advancing the debate. We will continue to work toward solutions that help spur economic growth and restrain the explosive growth of government spending."

Veronique de Rugy, an economist at the conservative-libertarian Mercatus Center at George Mason University in Northern Virginia:

"Capping discretionary spending, reducing the number of tax rates, reducing future Social Security benefits for high earners, and aboliting the state and local tax deduction, are all positive measures," said de Rugy. "But when you fail to propose the most fundamental reforms on the entitlement side of the budget, then you fail to act in a way that would change American's lives for the best."

"Raising taxes to pay for Social Security by raising the cap on them is ridiculous," said de Rugy, "especially when you consider all the money in the trust fund has already been used to pay for other federal spending programs rather than pay for future retirees."

John Irons, research and policy director at the Economic Policy Institute which has strong ties to organized labor:

Today the National Commission on Fiscal Responsibility and Reform released a preliminary proposal as devised by co-chairs Alan Simpson and Erskine Bowles. While the specifics of the proposal are not yet set in stone, the report shows that the commission is running severely off track.

In particular, nearly half of the adjustments come from cuts to discretionary spending - a portion of the budget that is not responsible for long-term deficits. The suggested reductions include a wide range of cuts that would cost jobs and increase financial burdens on working families. For example, the report suggests cutting the federal workforce by 10%, or 200,000 jobs, by 2020. The proposal suggests increasing health care fees on low-income veterans. It proposes budget cuts to national parks, the Smithsonian, water programs and airports. It even suggests eliminating funding for the Corporation for Public Broadcasting (sorry, Elmo). In total, the reductions in discretionary spending would be 16% below the president's request in his 2011 budget, and 18.5% below the 2020 levels...

Meanwhile, President Obama, who started it all by creating the commission, was reserving judgment until a final report is issued:

"The President will wait until the bipartisan fiscal commission finishes its work before commenting. He respects the challenging task that the Co-Chairs and the Commissioners are undertaking and wants to give them space to work on it. These ideas, however, are only a step in the process towards coming up with a set of recommendations and the President looks forward to reviewing their final product early next month," said White House spokesperson, Bill Burton.

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