Consensus is forming on what steps to take in cutting the deficit
After an election dominated by vague demands for less debt and smaller government, the sacrifices necessary to achieve those goals are coming into sharp focus. Big cuts at the Pentagon. Higher taxes, including those on home ownership and health care. Smaller Social Security checks and higher Medicare premiums.
A debate is raging over the size and shape of those changes, particularly the wisdom of cutting Social Security benefits. But a surprisingly broad consensus is forming around the actions required to stabilize borrowing and ease fears of a European-style debt crisis in the United States. As a presidential commission struggles to build political momentum for such a package, even Republicans who initially opposed the commission’s creation are still at the negotiating table.
“I’m open to everything if it gets us where we need to go,” said Sen. Tom Coburn (Okla.), who is emerging as one of the GOP’s most influential voices on budget issues. “This is going to require compromise, even from someone as conservative as me.”
Coburn is among a dozen lawmakers serving on the independent commission that President Obama created to help rebalance the federal budget. The panel will conclude its work after Thanksgiving with a vote that will reveal whether a convincing majority of its 18 members can agree on a deficit-reduction strategy.
Whatever the outcome, the plan unveiled this month by co-chairmen Erskine B. Bowles, a chief of staff in the Clinton White House, and Alan K. Simpson, a former Republican senator from Wyoming, has been respectfully received with a few exceptions by both parties. Its major elements are also winning support from a striking line-up of commentators.
Former AARP chief Bill Novelli, who sits on a separate budget-balancing panel, has acknowledged the need to trim benefits to make Social Security solvent for future generations. This second panel is chaired by Alice M. Rivlin, a budget director under President Clinton, and Pete Domenici, a former Republican senator from New Mexico.
Former Oklahoma governor Frank Keating, a conservative Republican who also sits on their panel, acknowledged the need for more tax revenue, saying lower income-tax rates paired with a national sales tax constitute “for me as a conservative, excellent public policy.”
Meanwhile, a chorus of retired military officers and national security experts has backed the call to reduce spending at the Pentagon for the first time since the Sept. 11, 2001, attacks.
“It is simply not going to be viable, either economically or politically, to exempt defense from the cuts that are coming,” said Gordon Adams, who oversaw military budgets during the Clinton administration. “Events over the past two weeks have begun to snowball to put defense, as well as every other form of federal spending, on the table.”
The strange bedfellows are a “testament to the moderate nature” of the ideas under discussion, Domenici said. For those who have taken the measure of the debt abyss, including the threat of $1 trillion annual interest payments by the end of the decade, “this is not extreme.”
After hours of talks by the presidential deficit commission, which includes some of most liberal and conservative lawmakers in Congress, Bowles said it is clear that “there is common ground there.”
“If this town decides it really wants to come together and solve this today,” he said, “it’s doable.”
The budget-cutters concede that they have a hard road ahead to win over key constituencies on and off Capitol Hill. Over the holiday break, Bowles and Simpson are rewriting their plan to accommodate the concerns of commission members, though the two insist, in Simpson’s words, that it will not be watered down to “mush” for the sake of winning votes. Meanwhile, each is being vilified by segments of their respective parties.
Speaking Friday at a breakfast organized by the Christian Science Monitor, Simpson said, “I’ve been called a Republican toady covering Obama’s fanny so he can destroy the Republican Party. Erskine is evil over on his side.”
Meanwhile, he said, some special interest groups “have organized against us and will come like harpies off the cliff . . . with their taloned hands and fingers out.”
Social Security is proving to be the most emotional issue. Over the next 65 years, Bowles and Simpson would gradually raise the early retirement age from 62 to 64 and the standard retirement age from 67 to 69. They would reduce scheduled benefits for better-off retirees and use a less-generous measure of inflation to calculate cost-of-living increases. And they would guarantee higher benefits to the poorest and oldest retirees, those most in need of additional support.
Organized labor and other liberal activists say the changes would prove devastating to the elderly, particularly janitors, waitresses and other blue-collar workers who cannot stay on the job until they are nearly 70. Meanwhile, neither party is eager to cross seniors, who turned out in big numbers on Nov. 2 and favored Republicans in “historic proportions,” according to Democratic pollster Celinda Lake.
“It was a real wake-up call,” Lake said, adding that Democrats could benefit by “taking a strong and vocal stand” against any reduction in Social Security benefits.
But fiscal experts say the Bowles-Simpson plan would be more gradual and less draconian than critics suggest.
“Even 75 years from now, individuals would still have the option of claiming benefits at age 65, the age established by Franklin Roosevelt,” said Social Security trustee Chuck Blahous.
Although some powerful Democrats, including House Speaker Nancy Pelosi (Calif.), have rejected benefit cuts, others are leaving the door open.
“I’m going to listen to everything,” Rep. Xavier Becerra (D-Calif.), one of Pelosi’s appointees to the deficit commission, said after emerging from a private session with Bowles and Simpson last week. “I’m not going to rule anything out.”
The call to cut military spending has also been drawing fire. Defense Secretary Robert M. Gates has said the commission’s proposal to slice $100 billion out of the Pentagon budget in 2015 would be “catastrophic,” given the global threats facing the United States.
But Republicans such as Coburn are looking for even deeper overall spending cuts than Bowles and Simpson have proposed, a goal that would be difficult to accomplish without taking a substantial whack at the Pentagon.
“We need to protect our nation, not the Pentagon’s sacred cows,” Coburn wrote in a recent op-ed in the Washington Examiner.
Tax policy is another battleground. Republicans such as Rep. Dave Camp(Mich.), a commission member who is in line to chair the tax-writing House Ways and Means Committee, say they cannot support any plan that raises federal revenues much beyond the historic average of about 19 percent of gross domestic product. The Bowles-Simpson plan would collect as much as 21 percent of GDP.
However, House Minority Leader John A. Boehner (R-Ohio) has endorsed the idea of closing major loopholes in the tax code, one of the commission’s signal tax reforms. Vin Weber, a former GOP congressman from Minnesota and a conservative strategist, said Republicans should embrace that idea, along with the commission’s call for lower marginal rates, saying it validates the party’s stance that lower rates are the key to economic growth.
“I’m telling Republicans to acknowledge that a positive argument has come out of the deficit commission. Let’s say ‘yes’ to something,” Weber said.
He said Republicans don’t want to raise taxes but do understand that not bringing down borrowing could open the door to the kind of crisis facing some countries in Europe.
“If we don’t act,” he said, “we will be Greece.”