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Ex-commission members chase a solution to runaway debt

- The Washington Times - Tuesday, February 19, 2013

The leaders of the defunct White House debt commission Tuesday floated a new deficit-reduction plan and warned that President Obama's legacy is riding on his ability to rein in runaway government spending.

Erskine Bowles, who was a chief of staff to President Clinton, and Alan K. Simpson, a former Republican senator from Wyoming, urged lawmakers to cancel the "mindless" $85 billion in spending cuts — known as sequesters — that are set to take effect in less than two weeks and embrace a $2.4 trillion deficit-reduction plan that demands that both parties put their "sacred cows" on the table.

"We need a grand bargain, and to get a grand bargain, both sides are going to have to move out of their comfort zones," Mr. Bowles said at a morning breakfast sponsored by Politico.

The proposal calls for Republicans to accept higher taxes through tax reform and Democrats to accept deeper cuts to health care programs as well as lower cost-of-living increases for a number of federal programs, including Social Security.

"We have to convince Democrats that they have to do more on health care than they have been willing to do to date, and we have to convince Republicans that they have to be willing to do more on revenues than they have already done," Mr. Bowles said.

Mr. Simpson said it is gut-check time for the Obama presidency.

"If he can't cut the mustard with solvency of Social Security under honest appraisals of the trustees and he can't get a handle on an automatic pilot rig of health care, he will have a failed presidency," Mr. Simpson said.

Democrats and Republicans have been locked in a multiyear battle over how best to tackle the soaring gross national debt, which has climbed past $16.5 trillion and grown by nearly $6 trillion on Mr. Obama's watch.

Mr. Bowles and Mr. Simpson led the president's National Commission on Fiscal Responsibility and Reform, which recommended in 2010 that Congress pass deep cuts to entitlement programs and military spending and scale back or end a string of popular tax breaks.

But the recommendations failed to gain enough traction, as opponents balked at the tax increases and proposed deep cuts to Social Security, Medicare and military spending.

The package rolled out Tuesday is smaller than the $4 trillion in deficit reduction that House Republicans have called for, but larger than the $1.5 trillion that the White House has demanded.

It includes $600 billion cuts to Medicare and Medicaid — more than the $400 billion in cuts proposed by the White House.

It also calls for $600 billion in additional revenue to be gleaned from eliminating unspecified loopholes and deductions in the federal tax code.

Republicans have said a proposal for more tax hikes is a nonstarter after the "fiscal cliff" deal last month that extended the George W. Bush-era tax rates for most taxpayers but raised marginal rates on the nation's top earners.

Mr. Simpson and Mr. Bowles are making another attempt as lawmakers brace for the March 1 sequesters, which were set into motion by a 2011 agreement that allowed Mr. Obama to raise the nation's borrowing limit, capped non-mandatory spending and tasked a supercommittee with finding another $1.2 trillion in cuts over the decade.

The committee failed, triggering the automatic across-the-board cuts to defense and domestic spending programs that have fueled partisan finger-pointing.

Congressional Republicans blame Mr. Obama and say it's up to Democrats to come up with a plan to replace the sequesters.

Mr. Obama countered Tuesday, calling on Republicans to delay the cuts, which he described as "brutal."

"These cuts are not smart," Mr. Obama said, flanked by firefighters and emergency responder personnel. "They are not fair. They will hurt our economy. They will add hundreds of thousands of Americans to the unemployment rolls."

Speaking at the breakfast Tuesday, Mr. Bowles and Mr. Simpson said sequesters threaten the fragile economic recovery.

"They are stupid, stupid, stupid," Mr. Bowles said, arguing that the cuts are shortsighted and should be phased in gradually over the next decade.

The latest Simpson-Bowles proposal drew mixed reviews.

Richard Trumka, president of the AFL-CIO, said that "once again, Bowles and Simpson have produced a plan that tells working people to 'drop dead.'"

Robert L. Bixby, executive director of the Concord Coalition, a bipartisan budget watchdog group, said the proposal will help focus debate on the nation's long-term fiscal problems when lawmakers return to Washington to tackle the continuing resolution set to expire March 27.

"It is another opportunity to do something and they are trying to inject a framework to include in the conversation," Mr. Bixby said. "What is needed now is nudging the normal budget process in the direction of a comprehensive deficit-reduction plan."

Douglas Holtz-Eakin, former director of the Congressional Budget Office and now president of the right-leaning American Action Forum, said the Simpson-Bowles plan is "underwhelming" and relies too heavily on tax increases.

"I think it is the wrong framework," he said. "We are tying to build a model for going forward and this just doesn't seem like the right one for me."

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