US Deficit Commission Heads Will Present Final Plan Wednesday

US Deficit Commission Heads Will Present Final Plan Wednesday

WASHINGTON (Dow Jones)--Leaders of a White House commission Tuesday said they would delay until Friday a final vote on a plan to hold down long-term federal spending by at least $3.8 trillion on Wednesday.

The slight delay is meant to give members more time to review the document, which is still receiving final touches. Even with the extra time, it isn't clear how many of the 18 panel members will endorse a package that includes what would be unpopular changes to the tax system and sharp spending cuts.

Regardless, the commission cochairmen said they had focused the American public on the potential fallout of the burgeoning debt caused by years of federal spending in excess of income.

"The era of deficit denial in Washington is over. I don't think there is a soul left in America who doesn't understand that this deficit and debt is like a cancer and is going to destroy our country from within if we don't face up to it and face up to it quickly," said Erskine Bowles, Democratic cochairman of the panel, along with former Wyoming Sen. Alan Simpson, a Republican.

Bowles, who was chief of staff to President Clinton, and Simpson need 14 of the 18 members of the National Commission on Fiscal Responsibility and Reform to support a proposal in order to issue a formal recommendation, which could then be voted on by Congress.

Simpson said he had hoped legislative language would be ready by now but the panel had run out of time. But Senate Majority Leader Harry Reid (D., Nev.) had told the chairmen that a vote would be possible in the Senate next year.

However, Simpson said they hadn't asked incoming House Speaker John Boehner (R., Ohio) for a similar commitment.

Earlier this month, the two proposed sweeping changes to tax and spending policy in an effort to cut the budget deficit by hundreds of billions of dollars a year and, ultimately, hold down the growth of the federal debt by about $3.8 trillion by 2020.

The budget deficit, or the amount by which federal expenditures exceed revenues each year, was about $1.3 trillion for fiscal year 2010, which ended on Sept. 30. The current national debt is roughly $13.8 trillion.

The cochairmen proposed big spending cuts along with lowering corporate and income tax rates while eliminating some tax breaks, but quickly encountered opposition among panel members and interest groups.

The two initially proposed $100 billion in Defense Department cuts and another $100 billion in savings on other domestic programs, including a federal wage freeze, workforce cuts and elimination of contractors.

Simpson and Bowles tried to avoid revealing too many details of the final plan. The final version is expected to be released publicly Wednesday morning.

But both did mention some specific points that had been outlined as options and now appear set for the final version.

For example, it appears the two will recommend eliminating tax deductions for mortgage-interest payments and other loopholes popular with the middle class and corporations.

"We have proposed eliminating these tax earmarks, which amount to $1.1 trillion a year," Bowles said. Such a move would be coupled with a simpler tax code and lower rates of 8%, 14% and 23% for individuals, and 26% for companies.

The proposal also is likely to include changes to Social Security, such as smaller benefits for wealthier Americans and a later retirement age.

Both men acknowledged that opposition would be strong.

"The far left and the far right are going to rip this thing to shreds and do it with zeal," Simpson said. "We will listen in the next few days to the same old crap I have been dealing with in all my public life: emotion, fear, guilt and racism."

The panel members are Sen. Max Baucus (D. Mont.), Rep. Xavier Becerra (D., Calif.), Rep. Dave Camp (R., Mich.), Sen. Tom Coburn (R., Okla.), Sen. Kent Conrad (D., N.D.), David Cote, chairman and chief executive of Honeywell International Inc. (HON), Sen. Mike Crapo (R., Idaho), Sen. Richard Durbin (D., Ill.), Ann Fudge, former chief executive of Young & Rubicam Brands, Sen. Judd Gregg (R., N.H.), Rep. Jeb Hensarling (R., Texas), Alice Rivlin, former director of the White House's Office of Management and Budget, Rep. Paul Ryan (R., Wis.), Rep. Jan Schakowsky (D., Ill.), Rep. John Spratt (D., S.C.), and Andrew Stern, president of the Service Employees International Union.