–Former Senate Budget Committee Chief Domenici Says Fiscal Doom Looms
–Domenici: U.S. Now On ‘Path To Ruin’ on Fiscal Policy
–Domenici: Wrong Too Focus Too Much On Discretionary Spend Cuts
–Ex-Fed Vice Chair Rivlin: Must Reform All Spending and Tax Code
–Senate Budget Chairman Conrad: Repeats Call For Budget ‘Summit’
–Sen. Conrad: ‘We Really Need A 10-Year Plan’

By John Shaw

WASHINGTON (MNI) – Former Senate Budget Committee Chairman Pete
Domenici and former Federal Reserve Board Vice Chairman Alice Rivlin
told the Senate Budget Committee Tuesday that policymakers should reach
an agreement on a comprehensive deficit reduction plan this year.

In testimony before the Senate Budget Committee, Domenici and
Rivlin said the U.S.’s current fiscal trajectory is deeply concerning
and if it continues will lead to a major economic crisis.

Both said a comprehensive fiscal agreement is needed which includes
discretionary spending restraints, entitlement reforms and a tax
overhaul which must include new revenues.

“If we do not act soon, America will be on the path to ruin,”
Domenici said.

“We need a comprehensive agreement” that includes spending cuts
and tax increases, he said.

“The size of the deficit requires we leave no stone unturned,” he
added.

Domenici, in a clear rebuke to the intense focus by congressional
Republicans to cut discretionary spending, said reductions in
discretionary programs cause the “biggest pain for the littlest gain.”

He said if the entire $1 trillion annual discretionary budget was
eliminated, the U.S. would still run “significant deficits as far as the
eye can see.”

Rivlin also said a balanced deficit reduction plan must include
discretionary and entitlement savings and additional revenues
accomplished in the context of sweeping tax reform.

“All parts of the budget need to be part of the solution,” Rivlin
said.

She said that an aggressive deficit reduction effort should lead to
a “long overdue overhaul” of spending programs and tax provisions.

Rivlin said substantial spending savings need to phased-in over
time, adding that it is important “not to cut too fast because the
economic recovery is still fragile.”

Late last year, Domenici and Rivlin, as co-chairs of a deficit
reduction task force sponsored by the Bipartisan Policy Center, released
a fiscal overhaul plan that would secure nearly $6 trillion of budget
savings by 2020.

The plan by Domenici and Rivlin would restructure major spending
programs such as Social Security and Medicare, place a multiyear freeze
on many domestic and defense programs and fundamentally overhaul the
U.S. tax system.

The bulk of their report focused on driving down the deficit.
Between 2012 and 2020, it outlined $2.7 trillion in spending savings,
$1.9 trillion in tax expenditure savings, $435 billion in new revenues
and $877 billion in debt service savings.

Domenici and Rivlin said their plan would stabilize the federal
debt below 60% of GDP by 2020. It would reduce federal spending from 26%
of GDP to 23% by 2020. Under their plan, revenues would reach 21.4% of
GDP by 2020.

At Tuesday’s hearing, Senate Budget Committee Chairman Kent Conrad
repeated his call for a budget summit hosted by President Obama and
congressional leaders that goes beyond the current short-term spending
battle.

“We really need a 10-year plan,” Conrad said.

“This (long-term deficits) is such a threat to the country, we got
to do it and do it this year,” he said of a comprehensive budget
agreement.

** Market News International Washington Bureau: 202-371-2121 **

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