–Senate’s ‘Gang of Eight’ Continues To Work on Deficit Plan
–Senators Meet At Mount Vernon To Discuss Simpson-Bowles Type Plan
–Group of Senators Has Been Toiling For Nearly Two Years

By John Shaw

WASHINGTON (MNI) – If Congress were a grade school (it, of course,
has been called much worse), the Senate’s “Gang of Eight” would be
awarded high marks for good conduct.

The group’s members show up to work on time, work diligently and
cooperatively, and try to complete their homework in a timely and a
responsible manner.

But good intentions aside, the central question pertaining to this
self-selected group of deficit hawks is if they can produce a deficit
reduction plan that is fiscally sound and commands the support of an
increasingly polarized Congress.

In a fiscal policy speech Tuesday, Sen. Chuck Schumer, the third
ranking Senate Democrat, said he believes that bipartisan talks among
the Senate’s “Gang of Eight” can be pivotal role in crafting a budget
agreement this year.

“If you asked me how a compromise might ultimately emerge during
the Lame Duck, I’d say their talks represent perhaps our best hopes
right now to achieve a bipartisan deal,” Schumer said.

The Senate’s “Gang of Eight” is comprised of Democrats Kent Conrad
of North Dakota, Mark Warner of Virginia, Michael Bennet of Colorado,
and Dick Durbin of Illinois and Republicans Tom Coburn of Oklahoma,
Saxby Chambliss of Georgia, Mike Crapo of Idaho, and Mike Johans of

During budget talks in the summer of 2011, the then “Gang of Six”
proposed a $4.6 trillion deficit reduction blueprint over a decade, with
about $2 trillion in revenue increases and major entitlement reforms.

By most accounts of last year’s budget talks, this plan did more to
complicate negotiations between President Obama and House Speaker John
Boehner than help them. It was introduced in July, just weeks before
the nation was about to hit the debt ceiling and injected confusion
rather than clarity into the talks.

Since then, Bennet and Johans have joined the group, and their work
has continued.

For more than a year, both Senate Majority Leader Harry Reid and
Senate Minority Leader Mitch McConnell have spoken about the “Gang of
Eight” with thinly veiled disdain. House Speaker John Boehner has also
been largely dismissive of the group.

However Reid has recently shifted his stance toward the Senate
bipartisan group, saying they are doing “serious” fiscal work.

McConnell’s spokesman, Don Stewart, said this week in an email that
a number of Senate Republicans are “discussing potential solutions”
to the challenge of the fiscal cliff and deficit reduction.

“These efforts are still in the early stages and he (McConnell) has
not endorsed any particular effort over another,” Stewart said.

The “Gang of Eight” is meeting this week in Mount Vernon, Virginia,
in an attempt to develop a deficit reduction plan that might be used to
substitute for the fiscal cliff.

Conrad, the chairman of the Senate Budget Committee, has told MNI
on several occasions that it remains uncertain if the “Gang of Eight”
talks can yield a deficit reduction agreement that Congress will
consider later this year.

Conrad said the group has several deficit reduction templates to
guide its deliberations such as the Simpson-Bowles package and a
similar one drafted by former Senate Budget Committee Chairman Pete
Domenici and former White House budget director Alice Rivlin.

The Simpson-Bowles plan calls for more than $4 trillion in deficit
reduction over a decade, with a blend of spending cuts and tax
increases. It would reduce spending to about 22% of GDP by 2022 and
bring revenues up to about 21% of GDP in 2022.

Alan Simpson and Erskine Bowles are working with the “Gang of
Eight” and other groups to update their deficit reduction plan which was
first released in December of 2010.

The “Gang of Eight” is also said to studying a proposal by the
think tank Bipartisan Policy Center, that would give policymakers a way
to avoid plunging off the fiscal cliff.

The BPC plan calls for delaying key fiscal cliff deadlines for six
months by passing a law in the post election session of Congress that
includes a deficit reduction framework with “real cuts in spending and
increases in taxes as a down payment.”

The BPC plan further requires the next Congress to pass a larger
deficit reduction plan in early 2013. If Congress fails to pass that
follow-up plan, a “backstop” would automatically become law that would
secure that deficit cut goals are met.

The BPC proposal does not say if this “backstop” would consist of
automatic spending cuts and tax increases or a specific deficit
reduction plan.

** MNI Washington Bureau: (202) 371-2121 **

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