–Hill’s Deficit Reduction Panel To Hear From Bowles, Simpson Tuesday
–Panel Expected To Continue Private Negotiations on Deficit Deal
–Senate Expected To Pass Three Spending Bill Package For FY’12
By John Shaw
WASHINGTON (MNI) – With both formal and informal deadlines steadily
approaching, Congress’ deficit reduction panel will intensify work this
week with both a public session and private meetings to explore possible
budget compromises.
The committee will hold a hearing Tuesday at 11 a.m. with leaders
of earlier deficit bipartisan reduction efforts.
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 outlining a
credible framework for a bipartisan $4 trillion deficit reduction plan.
Also testifying before the committee Tuesday will be former Senate
Budget Committee Chairman Pete Domenici and former White House budget
director Alice Rivlin who also released a $4 trillion deficit reduction
plan late last year under the sponsorship of the Bipartisan Policy
Center.
So far, Congress’ deficit reduction panel has held four public
hearings: its organizational meeting on Sept. 8; a budget overview
hearing on Sept. 13 with Congressional Budget Office director Doug
Elmendorf; a revenue overview on Sept. 22 with Thomas Barthold, the
chief of staff of Congress’ Joint Tax Committee; and a second session
with Elmendorf last Wednesday.
Perhaps more importantly, the 12-person panel has been meeting
several times a week in often lengthy private sessions. Members have
left those sessions saying nothing that offered much information about
where the panel is headed.
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.
Among other things, 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 elicited no enthusiasm from Republicans on the
panel who insist that the final deficit reduction package be largely, if
not exclusively, devoted to spending cuts.
Republicans on the panel prepared 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.
Both Democratic and Republicans plans are essentially refinements
of party positions that were developed in budget talks earlier this year
between President Obama and House Speaker John Boehner and in budget
talks conducted by Vice President Joe Biden.
However, it may be that the Democratic and Republican plans mark
the beginning of more intense negotiations within the deficit panel.
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 CBO’s 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 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.
In other action this week, the Senate is expected to complete
action on a fiscal year 2012 spending bill that combines three of the
regular bills: Agriculture, Commerce-Justice-Science, and
Transportation-HUD.
The three bill “minibus” will allocate about $128 billion in
discretionary spending for FY’12.
The 2012 fiscal year began on Oct. 1. The federal government is
running on a stop-gap spending bill that extends until Nov. 18.
The House has passed six of its 12 bills while the Senate has only
passed one of its bills. No final version of a regular FY’12
appropriations bill has yet been passed.
The House, will consider several bills that seek to boost business
investment.
A subcommittee of the House Financial Services Committee will hold
a hearing Wednesday at 10 a.m. on the status of the Consumer Financial
Protection Bureau.
Another subcommittee of the House Financial Services Committee will
hold a hearing Thursday at 10 a.m. on legislation to spur the private
mortgage investment market.
** Market News International Washington Bureau: (202) 371-2121 **
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