Among the recommendations from the debt commission were a three-year federal pay freeze, a plan to cut the federal workforce by 200,000, or 10 percent, by hiring two people for every three who leave, a change to federal pensions by moving to a high-five instead of a high-three to calculate retirement pay and a change to the Federal Employee Health Benefit plan to make it a defined contribution premium support program.
“If you talk to any business, they have fewer employees today than they did two years ago,” Bowles said during a press conference on Wednesday after the commission issued their final recommendations. “It’s tough times. Every business, every family, every state government has had to face up to this because they have to balance their budget because they can’t print money. We have to do this.”
“The Commission’s report underscores that to sustain growth in the medium and long term we need to face some difficult choices to curb runaway debt,” said President Obama in a statement. “It will require cutting the spending we don’t need in order to invest in what’s necessary to grow our economy and our middle-class. It will require all of us, Democrats and Republicans, to find common ground without compromising the fundamental principles we hold dear. Because the undeniable fact is that no one party can successfully tackle this challenge alone.”
“Chairmen [Erskine] Bowles and [Alan] Simpson met the charge that I gave them and the commission: to bring our deficits down in the medium term and to meaningfully improve our long-run fiscal situation so that we can keep commitments made to future generations.”
The president continued, “The commission’s majority report includes a number of specific proposals that I – along with my economic team — will study closely in the coming weeks as we develop our budget and our priorities for the coming year. This morning, my budget director, Jack Lew, spoke with Chairman Bowles and invited the entire commission in to meet with him and Secretary [Tim] Geithner to discuss the commission’s proposals. Overall, my goal is to build on the steps we’ve already taken to reduce our deficit, like slowing the growth of health care costs, proposing a three-year freeze in non-security discretionary spending and a two-year pay freeze for federal civilian workers, and restoring the rule that we pay for all of our priorities.”
But commission members said that by winning over an 11-7 majority on the panel for its blueprint, it had defied expectations. They said it showed that Washington politicians of both the Democratic and Republican parties could have an “adult conversation” about the painful choices required to avert a European-style debt crisis.
Devout Senate conservatives Mike Crapo (R-Idaho) and Tom Coburn (R-Okla.) joined with close Obama allies Sens. Dick Durbin (D-Ill.) and Kent Conrad (D-N.D.) in support of the failed plan. Panel members said the commission’s work had fundamentally changed the national debate on the deficit. The plan received “aye” votes from five of six senators who served on the 18-member panel.
But five of six House lawmakers on the panel voted “nay” and killed the plan, which would slash $4 trillion from the budget over the coming decade through a combination of tax increases and painful spending cuts – including a hike in the Social Security retirement age and lower cost-of-living increases for the program.
“The Bowles-Simpson plan further erodes the middle class and threatens low-income Americans,” said Rep. Jan Schakowsky (D-Ill.). Rep. John Spratt Jr. (D-S.C.) – who lost a re-election bid last month – was the only House member to endorse the plan, but quipped, “Thank God I’m not running again.” That registered, especially, with Conrad, who faces a potentially difficult re-election bid in deeply Republican North Dakota.
Among its many contentious provisions, the plan would raise the Social Security retirement age and scale back popular tax deductions on health insurance and mortgage interest.
Bowles and Simpson have labored on the deficit issue for months, keeping all but the most partisan members involved in the commission’s work. Gaining the support of Durbin, a key Obama ally, was a major development.
“Today, with my vote, I’m claiming a seat at the table,” Durbin said, adding that he saw the measure more as a starting point for next year’s debate.
But all three House Republicans on the panel voted against the plan, as did liberal Democrats Schakowsky and Xavier Becerra of California. So did Senate Finance Committee Chairman Max Baucus (D-Mont.)
Durbin raised eyebrows Wednesday when he endorsed gradually raising the full Social Security retirement age from 67 to 69 over the next 65 years, and he resisted heavy pressure from labor unions and others in backing the plan.
Besides increasing the Social Security retirement age, the plan calls for reducing future increases to benefits in order to help control federal spending. It would eliminate or scale back tax breaks – including the child tax credit, mortgage interest deduction and deduction claimed by employers who provide health insurance – in exchange for rate cuts on corporate and income taxes. It would raise the federal gasoline tax 15 cents a gallon to fund transportation program.
The plan, which was unveiled Wednesday, elicited catcalls from advocates on the left – over cuts to Social Security and other programs – and conservatives who oppose its estimated $1 trillion or so in higher tax revenues over the coming decade.
Baucus announced Thursday he couldn’t support it. He said the plan “would cut pensions for military members, lower Social Security payments, raise the retirement age and limit Medicare benefits.”
Andrew Taylor of the Associated Press contributed to this report.
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