–Deficit Panel Co-Chairman Says Plan Would Affect All Americans
–Wants To Trigger National Debate On Budget
–Everyone In ‘Crosshairs’ Of Budget Proposal
–Key House Republicans: Will Review ‘Provocative Proposal’

By John Shaw

WASHINGTON (MNI) – Former Sen. Alan Simpson, the co-chairman of the
National Commission on Fiscal Responsibility and Reform, Wednesday said
he hopes the draft proposal released earlier in the day will trigger a
fundamental debate in the U.S. about the future of fiscal policy and the
nation’s dangerous budget predicament.

In comments to reporters after his panel reviewed his draft
proposal, Simpson said the sweeping budget proposal would affect “every
segment of society.”

“We don’t leave anyone out of the crosshairs,” Simpson said.

“It’s time to lay it out on the table,” he said, adding that the
plan he co-wrote with former White House chief of staff Erskine Bowles
constitutes a “dramatic” change in fiscal policy.

“We think this is serious business,” he said, adding that the
fiscal plan they released is “not the usual stuff.”

Simpson said he and Bowles will reconvene their debt panel next
week to go through the proposal line-by-line. He said future meetings
will determine if there are 14 votes on the 18 member panel to approve
the plan — or some variation of it.

President Obama created the commission on Feb. 18 by executive
order after an attempt by lawmakers to create a panel by statute failed
in the Senate.

The commission is charged to issue a report by Dec. 1 that would
cut the deficit to about 3% of gross domestic product by fiscal year
2015 and begin slowing the growth of debt over the long term.

In order for the panel to issue recommendations, 14 of the 18
members need to reach an agreement.

The draft budget plan Simpson and Bowles released calls for more
than $4 trillion in budget savings over a decade.

Their draft plan, which was presented to their panel Wednesday,
would bring the federal budget deficit down to 2.2% of gross domestic
product by 2015. It would reduce the nation’s debt to 60% of GDP by 2024
and to 40% of GDP by 2037.

The plan would wring deep savings out of every corner of the
federal budget, including defense and Social Security.

The Bowles-Simpson plan would put in place tough discretionary
spending caps that would help achieve about $1.4 trillion in savings. It
calls for $733 billion in entitlement savings and $751 billion in
savings from overhauling tax expenditures over a decade.

The plan calls for fiscal changes that would bring federal spending
down to about 21% of GDP and boost revenues to bring them up to 21% of
GDP. The plan would balance the federal budget by 2037.

In their draft, Bowles and Simpson call for fundamental tax reform
in which the marginal rates are reduced, the tax base is broadened, and
revenue is capped at 21% of GDP.

After the panel’s deliberations Wednesday, Senate Budget Committee
Chairman Kent Conrad, who is a member of the panel, called the draft a
“serious, credible plan.”

He added: “Controversial, certainly.”

In a statement, three senior House Republicans on the debt panel
said they will review the plan carefully and praised its boldness.

“This is a provocative proposal,” said incoming House Budget
Committee Chairman Paul Ryan, incoming House Ways and Means Committee
Chairman Dave Camp and Rep. Jeb Hensarling, who is seeking a House GOP
leadership post.

The three Republicans didn’t endorse the plan, but said they will
continue to work to control spending and boost the economy.

“We have concerns with some of their specifics,” they said of the
plan, but praised Bowles and Simpson for offering a fiscal solution.

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

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