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Today's Top News
Deficit Panel Targets Social Security and Taxes
WASHINGTON - The co-chairmen of a presidential commission to cut the budget deficit on Wednesday proposed reducing benefits and raising the U.S. pension retirement age among an array of tax and spending changes.
Taking aim at some of Washington's most politically explosive fiscal issues, the draft proposals were portrayed as achieving $4 trillion in deficit reduction through 2020, but they got a mixed reception from other commission members.
With a final report due from the panel on December 1, Democratic Representative Jan Schakowsky, a commission member, told reporters: "It's not a proposal I could support."
Republican Representative Paul Ryan, also a commission member, said: "There are things in here I like, things I don't like. This is a serious, impressive effort. It's a good start ... We've got a long way to go."
Co-chairmen Erskine Bowles and Alan Simpson also called for changes to the mortgage interest tax deduction, cuts in defense spending, and a reduced base rate for corporate taxes, according to the draft proposal distributed to reporters.
The proposal suggests raising the Social Security retirement age to 68 by 2050 and 69 by 2075 with a "hardship exception" for certain occupations where that would be unrealistic, the draft said.
Bowles, a Democrat, was chief of staff for President Bill Clinton. Simpson is a retired Republican senator. The two were named to head the commission this year by President Barack Obama in a move meant to show the White House is serious about tackling the deficit.
The two also proposed phasing in budget cuts beginning in fiscal 2012 and bringing down federal spending eventually to 21 percent of gross domestic product.
Fourteen of the panel's 18 members are supposed to approve a final report for Obama containing recommendations to balance the budget. But analysts expect it to be difficult to reach that kind of consensus and predict the commission may end up issuing a less conclusive report.
DEFICIT REDUCTION TARGETS
The commission's proposal came as a separate, private-sector panel called for a shake-up of the budget process that would set clear targets for reducing red ink and impose spending cuts and tax increases if targets were missed.
The recommendation by the Peterson-Pew Commission on Budget Reform, a balanced-budget advocacy group that has no official government role, recommended that the president and Congress be required to respect deficit-reduction targets and that serious consequences be levied for falling short.
If a budget enacted by Congress missed a target, the president could propose cuts to bring it in line, the Peterson-Pew Commission recommended.
"If the target were still missed, spending reductions and tax increases would be imposed through automatic trigger mechanisms," the Peterson-Pew Commission said.
The report from Peterson-Pew -- one of a handful of panels studying the deficit problem -- comes days after an election that swept Republicans to power in the House of Representatives partly on a wave of voter outrage over the $1.3 trillion deficit and the national debt of more than $13.6 trillion.
The presidential commission has held five public meetings this year. Closed-door meetings have occurred regularly.
Democrats are resisting spending cuts, while Republicans, emboldened by the election results, are likely to keep refusing to consider tax hikes, according to commission members.
Most budget analysts agree that some mix of both is needed to tackle the huge problem, but aides said it seemed unlikely that the presidential commission would reach a consensus by the time their final report is due on December 1.
(Additional reporting by Andy Sullivan, Kevin Drawbaugh and Kim Dixon; Editing by James Dalgleish)