Senate scotches deficit panel

WASHINGTON – The Senate on Tuesday rejected a proposal to establish a potentially powerful commission to reduce the federal budget deficit, despite President Barack Obama’s endorsement and swelling voter anger about government spending and debt.

The bipartisan measure would have required Congress to accept or reject the commission’s recommendations without making changes, a provision designed to prevent lawmakers from dodging the most politically risky proposals.

The vote came hours after the Congressional Budget Office issued a report predicting that the 2010 budget deficit would be $1.35 trillion, a slight improvement from 2009’s $1.4 trillion but still higher as a share of the economy than any other year since World War II. It predicted the pace of economic recovery would be slow.

In addition, the CBO reported the government is on course to double the national debt in five years and to triple it in a decade.

Political pressure to rein in federal spending has intensified in the wake of the Democratic Party’s surprising loss of the late Edward M. Kennedy’s Senate seat last week. Many analysts blamed the outcome of the Massachusetts special election on voter frustration at federal spending and debt.

Against that backdrop, the White House said Monday that it would try to curb deficits by imposing a three-year freeze on government spending. But critics derided that as a fig leaf because the freeze would apply only to a small part of the budget.

Obama is also likely to tell Congress in his State of the Union address today that he will freeze the salaries of his top White House aides and of appointees across the government, according to a senior administration official who spoke on condition of anonymity to discuss the speech in advance.

Obama has said he is willing to set up a deficit-reduction commission by executive order. But critics say a presidentially created panel would be toothless because it could not force Congress to act.

Even as Democrats scramble to show their commitment to deficit reduction, they are contemplating major new spending initiatives. Those include legislation to spur job creation, the health care overhaul and a long-delayed effort to increase Medicare payments to doctors.

Proponents of the rejected deficit commission argue that the nation’s fiscal problems have gotten so large that Congress cannot handle them – and the new Congressional Budget Office report laid out the stark challenges.

“Is there any doubt that we are on a collision course with economic reality?” asked Senate Budget Chairman Kent Conrad, D-N.D., sponsor of the deficit commission proposal. “There is no question that doing things the same old way that has led to this crisis is unlikely to lead to a different result.”

The Senate vote was 53-46, seven short of the 60 needed for approval. The vote was a rare display of bipartisanship: Supporting the proposal were 36 Democrats, 16 Republicans and one independent. The opposition was a coalition of Republicans who worried that the panel would give new impetus to tax hikes, and Democrats concerned that it would force cuts in Medicare and other prized programs.

Others opposed the proposal because Congress would have been forced to vote on the panel’s recommendations without alteration. That approach was taken years ago as a way to force Congress to allow the closure of unneeded military bases. But taking that tack on the budget, Senate Finance Committee Chairman Max Baucus, D-Mont., objected, would reduce senators to rubber-stamping bureaucrats, stripped of power and responsibility to decide how to reduce the deficit.

“Bureaucrats do not enact great legislation, senators do,” Baucus said. “Let us not shirk our responsibility.”

Sen. Judd Gregg, R-N.H., a co-sponsor of the proposal, said its defeat was “yet another indication that Congress is more concerned with the next election than the next generation.” Gregg is retiring from Congress at the end of the year.

The deficit commission was proposed as an amendment to legislation that would increase the ceiling on federal borrowing by $1.9 trillion, to $14.3 trillion. The larger ceiling, Democrats hope, would be enough to last through the 2010 elections – forestalling another difficult vote during the fall campaign.

Raising the debt ceiling is an unpopular vote, and Senate Majority Leader Harry Reid, D-Nev., will have to gather 60 votes to end debate – a hurdle that could prove challenging.

In advance of Obama’s State of the Union address, his proposal for a three-year freeze in spending got mixed reviews. Liberals protested that defense spending would be exempt. Conservatives complained that it was too little too late, coming after a year in which Congress boosted discretionary spending by 17 percent.

“It’s as if someone stumbled out of an all-you-can-eat buffet in a food coma and vowed to eat no more than that every day for the next three years,” said John Kartch, spokesman for the conservative group Americans for Tax Reform.

White House press secretary Robert Gibbs said the proposal was a modest start to what he acknowledged would be far bigger budget battles.

“I don’t think this is intended to solve all our problems,” he said. But, he added, “if we can’t make these steps, how are you going to go after stuff that we know is politically hard?”