Press Item ● Jobs and Economy
For Immediate Release: 
January 19, 2010
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Associated Press

WASHINGTON -- President Barack Obama is poised to name a special commission to come up with a plan to curb the spiraling budget deficit, top Democrats said Tuesday evening.

The bipartisan 18-member panel would be asked to report a deficit reduction blueprint after the November elections that would be voted on before the new Congress convenes next year.

Obama has signaled that the White House is willing to tackle the deficit this year, and the deficit panel would allow him to signal resolve without recommending specific steps that might offend key interest groups.

House Majority Leader Steny Hoyer, D-Md., predicted Obama would name the anti-deficit panel by a presidential order and that Congress would at the same time strengthen so-called pay-as-you-go budget rules designed to make it more difficult to pass legislation that would increase the deficit.

Hoyer spoke to reporters after returning from a White House meeting with other senior Democratic lawmakers and Vice President Joe Biden.

Key details remain to be worked out and the agreement is tentative, Senate Budget Committee Chairman Kent Conrad, D-N.D., said. The deficit panel, patterned after a 1982 group that came up with a successful plan to strengthen Social Security, would be comprised of 10 Democrats and eight Republicans. It would take 14 members to report a plan - requiring bipartisanship - which would guarantee a vote in both House and Senate. It's unclear who would choose the GOP members, but to have credibility with Republicans, GOP leaders would likely have input.

The idea behind the commission is that it is the best way to get policymakers to make the politically arduous decisions on raising taxes and curbing the growth of government programs like Medicare.

But lawmakers warned that there's no guarantee the commission could even agree upon a plan in a poisonous election-year atmosphere. And even if it did, it's not at all certain that Congress could pass it.

Meanwhile, House Democrats would win enactment of a longtime goal: a so-called pay-as-you-go law that would make it far more difficult for lawmakers to run up the deficit with new tax cuts and benefit programs.

Under pay-as-you-go, if offsetting cuts or revenue hikes are not found to pay for new policies, across-the-board spending cuts would hit selected programs such as farm subsidies and Medicare.

Further details on the proposal need to be worked out. Legislation to extend middle-class tax cuts expiring at the end of the year would be exempt from the pay-as-you-go rules. But legislation to reduce the estate tax and keep millions of middle-class families from feeling the bite of the alternative minimum tax would be exempt from the rules for only two years, Conrad said.

The twin developments come as the Senate is poised to take up a bill Wednesday that would allow the federal government to issue bonds to fund government programs and prevent a first-time default on obligations. Budget hawks in both House and Senate have held the measure hostage while seeking the anti-deficit steps.

Moving to increase the so-called debt limit is a major source of anxiety for Democrats. The debt limit legislation is likely to be in the range of $1.5 trillion - enough to keep the government running past the November elections.

The pay-as-you-go plan must still win a vote in the Senate as an amendment to the debt limit bill. Sixty votes are required under an agreement reached last year to pass the measure.

Conrad and Sen. Judd Gregg, R-N.H., have been pressing for a bipartisan deficit commission whose findings would be awarded a mandatory up-or-down vote. The Obama-named commission mirrors their plan in key respects.

"This has the potential to be very important for the country," Conrad said.

Conrad's deficit commission plan, however, appeared to sink after assaults from interest groups on both right and left. Conservatives worry about their ability to stop tax hikes; liberal groups fret they wouldn't be able to block cuts to Medicare and Social Security.

Senate Minority Leader Mitch McConnell, R-Ky. - who had endorsed Conrad's bill - has now lined up against it.

The president's commission idea was a fallback position. The White House, once cool to the idea of a deficit commission, fell behind it as a way to advance the debt limit and avoid a crisis that would rattle the markets.

Republican supporters of a bipartisan deficit commission such as Sens. Gregg and George Voinovich of Ohio, concur with Conrad that the idea is the best way to get policymakers in both parties to put aside politics and agree to the politically difficult spending cuts and tax hikes required to close intractable budget deficits that could exceed $1 trillion for the rest of the decade.

Voinovich and Gregg, however, aren't optimistic that a commission named by Obama would be very successful.

The Senate cleared a $290 billion increase in the debt limit - to $12.4 trillion - on Christmas Eve, but only as a stopgap measure to extend the deadline for talks on a long-term measure.