–Hill Deficit Panel To Hear From Simpson-Bowles & Domenici-Rivlin
–Congress’ Deficit Reduction Panel To Hold Hearing At 1:30 P.M. Tuesday

By John Shaw

WASHINGTON (MNI) – It seems very likely that the veterans of
earlier efforts to develop bipartisan fiscal plans will impart a simple
message when they testify before Congress’ newest deficit reduction
panel Tuesday afternoon: come up with a bipartisan plan to cut the
deficit by at least $4 trillion over a decade — and do it quickly.

Congress’ Joint Select Committee on Deficit Reduction will hold a
hearing Tuesday at 1:30 p.m. with the leaders of two noteworthy efforts
to craft a bipartisan deficit reduction plan.

The panel will receive testimony from former White House chief of
staff Erskine Bowles and former Senator Alan Simpson, the co-chairs of
the president’s fiscal commission. The Simpson-Bowles report was
released last December and has been frequently described as providing
the template for a credible, bipartisan $4 trillion deficit reduction
plan.

Former Senate Budget Committee Chairman Pete Domenici and former
White House budget director Alice Rivlin will also testify to panel
about their effort to craft a slightly different plan that achieved more
than $4 trillion in deficit reduction over a decade. The Domenici-Rivlin
plan was developed under the sponsorship of the Bipartisan Policy
Center.

Congress’ deficit reduction panel will hold its hearing Tuesday
afternoon against the backdrop of deep partisan divisions within its
ranks and a dwindling number of days to reach an agreement.

Last week, Senate Finance Committee Chairman Max Baucus, a
Democrat, floated a plan that calls for about $3 trillion in deficit
reduction over a decade with a nearly equal blend of spending cuts and
tax increases.

Baucus’ plan calls for about $1.3 trillion in new revenues, $575
billion in health care entitlement savings, $400 billion in
discretionary savings and about $250 billion in other entitlement
savings.

Baucus’ proposal was dismissed as unacceptable by Republicans on
the panel who say the final deficit reduction package must be largely,
if not exclusively, devoted to spending cuts.

Republicans on the panel responded with a counteroffer with about
$1.5 trillion in spending cuts and about $600 billion in new revenues.
The new revenues come largely through the increase in some fees and an
assumption that tax reform would generate about $200 billion in new
revenues.

It is unclear if the dueling offers indicate the start of more
intense negotiations within the deficit panel or suggest that the two
parties are hardening their fiscal stances.

Congress’ 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 beginning in
2013.

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

In a hearing last week, the Congressional Budget Office’s director,
Doug Elmendorf, said it would take “some weeks” for the CBO to score any
plans developed by the deficit panel. This would suggest that the panel
needs to reach an agreement by mid-November at the latest to get a CBO
budget estimate in a timely way.

Speculation continues that the panel will ultimately announce a
two-step process with some specific deficit reduction identified by the
end of November and instructions given to key congressional committees
to come up with additional deficit reduction packages by the early
spring.

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

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