Budget experts share debt anxiety
Supercommittee told failure would harm U.S.
WASHINGTON – Political heavyweights from past budget debates descended on the congressional supercommittee to deliver a tough message as the panel struggles to agree on a $1.5 trillion deficit-reduction plan by its Thanksgiving deadline.
The four veterans offered their expertise – along with some criticism – as they implored the committee to worry less about the partisan political climate and more about the economic harm that could come to the financial markets and nation’s credit rating if a big deal cannot be reached.
“I’m worried you’re going to fail,” said Erskine Bowles, the former Clinton administration official and co-chair of President Barack Obama’s fiscal commission.
“The effect it would have on how people look at this country would be disastrous,” he said.
“Devastating,” agreed Alice Rivlin, the founding director of the Congressional Budget Office, who warned of a long period of stagnant economic growth, “worse than the one we’re climbing out of,” if global markets dismiss Congress as dysfunctional.
Tuesday’s public session came as the 12-member supercommittee, six Democrats and six Republicans, has been meeting mostly behind closed doors to develop a proposal to cut deficits over the next decade.
Failure by Congress to approve a compromise would trigger mandatory cuts, slicing equally across defense and domestic accounts, that both sides want to avoid.
But because the mandatory cuts would not take effect until 2013, many in Congress think they can undo them in the year ahead. Even as private conversations among smaller groups of committee members continue, the panel has essentially deadlocked along partisan lines.
Republicans are refusing to raise taxes to help reduce federal deficits. Most GOP lawmakers have signed an anti-tax pledge from conservative activist Grover Norquist’s Americans for Tax Reform and are hesitant to be targeted by his group in the 2012 elections.
Democrats portray their offer as having met Republicans part way by proposing to make cuts in Medicare and other entitlement programs – but only if the GOP concedes on some new taxes. Democrats want to raise taxes on the wealthier Americans and limit loopholes.
The Democrats’ “balanced approach” got an assist from the fiscal hawks Tuesday when Sen. Patty Murray, D-Wash., the supercommittee co-chair, asked the experts for a show of hands if they agreed that both revenues and taxes should be in the mix.
All four of the budget experts, including the two former Republican senators, raised their arms.
The quartet included fiscal commission co-chair Alan Simpson, the former Republican senator from Wyoming, and former Sen. Pete Domenici, R-N.M. They urged the supercommittee to go beyond its mandate and reduce deficits by more than $4 trillion to further stabilize the country’s finances.
Spending cuts must be serious, the budget hawks said, but should be delayed until the economy improves. Simpson and Bowles noted that their commission found revenue by reducing tax rates and limiting so-called tax expenditures – the loopholes and special deductions that they say is simply spending by another name.