–Congressional Deficit Panel To Meet With Bipartisan Group of Senators
–Senate’s ‘Gang of Six’ Proposed $4 Trillion in 10 Year Savings
–Senate Group’s Plan Included Spending Cuts, Tax Hikes, Entitlement Fix

By John Shaw

WASHINGTON (MNI) – With a deadline approaching and partisan
gridlock deepening on Capitol Hill, Congress’s new deficit reduction
panel will receive a briefing Wednesday from the members of a bipartisan
group of senators who have developed a far-reaching deficit reduction
plan.

The Senate’s so-called “Gang of Six” will brief the Joint Select
Committee on deficit reduction in a private session.

The “Gang of Six” is comprised of Democratic senators Kent Conrad,
Dick Durbin and Mark Warner and Republican senators Tom Coburn, Mike
Crapo and Saxby Chambliss.

In the early months of this year, the “Gang of Six” tried to
transform the main elements of the 2010 Simpson-Bowles deficit report
into legislative language.

In July, after lengthy deliberations, the group issued a more
general plan that called for about $4 trillion in ten year savings by
reducing spending, raising revenues and reforming some entitlements.

The plan, which was introduced during the final weeks of the debt
ceiling battle, has languished.

The “Gang of Six” plan calls for Congress to enact $500 billion of
immediate deficit reduction and then charges various congressional
committees to meet specific savings targets within six months.

It endorsed a shift to the chained CPI for indexing government
benefits starting in 2012, but allowed for some exemptions.

The “Gang of Six” offered a number of tax-related proposals. It
called for eliminating a number of tax expenditures and reducing
individual tax rates by establishing three brackets with rates of 8-12%,
14-22% and 23-29%.

The plan endorsed the creation of a single corporate tax rate of
between 23% and 29%.

The Senate group said that tax reform which is carefully crafted
could provide $1 trillion in additional revenue.

Congress’s Joint Select Committee on Deficit Reduction is charged
to submit a report to Congress by Nov. 23, 2011 that reduces the deficit
by between $1.2 trillion and $1.5 trillion for the 2012 and 2021 period.

The final package, if one is agreed to by the majority of the
panel’s 12 members, must be voted on without amendment by the House and
Senate by Dec. 23, 2011.

If the panel fails to agree on a spending cut package or Congress
rejects its plan, a budget enforcement trigger would secure $1.2
trillion in budget savings through across-the-board cuts.

The cuts would be equally divided between defense and non-defense
programs but would exempt Social Security, Medicaid and low-income
programs.

The panel has held three public hearings: its organizational
meeting on Sept. 8, a budget overview hearing on Sept. 13 with
Congressional Budget Office Director Doug Elmendorf and a revenue
overview on Sept. 22 with Thomas Barthold, the chief of staff of
Congress’s Joint Tax Committee.

In the last several weeks, the 12-person panel has been meeting
several times a week in often lengthy private sessions. Members have
left those sessions tight-lipped, saying nothing that might provide a
hint about where the panel is headed.

Some Republican members of the panel, such as Sen. Jon Kyl, have
said the panel should focus on achieving the $1.2 trillion to $1.5
trillion deficit cutting goal.

Some lawmakers and outside groups have urged the panel to come up
with a $4 trillion deficit reduction plan over 10 years.

Analysts have said that the deficit reduction panel needs to submit
its recommendations to the Congressional Budget Office by early November
so the CBO can score the package by Nov. 23.

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

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