A sweeping draft proposal offered by the Democratic and Republican chairmen of President Obama’s deficit reduction commission Wednesday endorsed a string of painful measures to rein in the government deficit, including reduced cost-of-living increases for Social Security recipients, Medicare cuts and ending or curbing popular tax breaks such as the home mortgage interest deduction.
The size and sweep of the proposal, which also included recommendations for cuts in federal farm subsidies, defense programs and foreign aid, appeared to stun a number of commission members, who face a deadline of Dec. 1 to produce their recommendations.
“This is not a proposal I could support,” Rep. Jan Schakowsky, Illinois Democrat, told reporters as the draft was being released. “On Medicare and Social Security in particular, there are proposals I could not support.”
The reception underscored the hard choices ahead for Mr. Obama and the enlarged Republican contingent on Capitol Hill in curbing federal spending, tackling the current $1 trillion federal budget deficit and taking longer-term steps to work down the soaring federal debt.
On Social Security, the plan would change the formula on cost-of-living increases for the nation’s seniors, who are already facing a second straight year when Social Security benefits were flat.
For future retirees, the plan also calls for the retirement age to be raised gradually from the current 65 to 68 by the year 2050 and 69 in 2075.
The draft, which has only been endorsed by panel chairmen Erskine Bowles and former GOP Sen. Alan Simpson, does recommend cuts in income and corporate tax rates, but would finance those cuts by eliminating other tax breaks. Spending cuts could be phased in over time to reduce the impact on current programs or the economy.
The commission’s final proposal must win the votes of 14 of the 18 committee members to pass, and it is expected that the draft will be changed in the commission’s debate between now and next week.
Meanwhile the federal government began the new budget year with a deficit that was down 20 percent from a year ago but still came in as the third highest October imbalance on record, the Associated Press reported.
The Treasury Department said Wednesday that last month’s deficit totaled $140.4 billion, down by $35.9 billion from the record holder for the month, an imbalance of $176.4 billion in October 2009.
Even with the improvement, the red ink last month set the stage for what is expected to be a third consecutive year of $1 trillion-plus deficits.