–Senate Budget Chair Conrad: Simpson-Bowles Panel Trying For Deal
–Sen. Conrad: Need ‘Serious and Credible’ Deficit Reduction Plan
–Sen. Conrad: Need Deficit Cut Plan That ‘Kicks In’ When Econ Stronger
–Sen. Gregg: Stimulus Package Was ‘Misdirected,’ Hasn’t Helped Much
–Sen. Gregg: Current Fiscal Path Not Sustainable

By John Shaw

WASHINGTON (MNI) – Senate Budget Committee Chairman Kent Conrad and
Sen. Judd Gregg, the ranking Republican on the committee, agreed
Wednesday the long-term U.S. fiscal path is dangerous.

They said they hope the presidential commission on deficit
reduction chaired by Erskine Bowles and Alan Simpson can agree on a
plan, but said this is far from certain.

In opening comments at a Budget Committee hearing on the federal
response to the economic crisis, both Conrad and Gregg described the
nation’s fiscal outlook as grim, even ominous.

Both are members of the Bowles-Simpson panel and said the
deliberations of the panel have been serious and intense but have not
yet focused on the details of a package.

Conrad said. “I don’t think anyone knows” if the panel will be able
to craft a plan supported by 14 of the 18 members — as is required by
the executive order creating the commission.

“We don’t have a plan,” Conrad said, but added deliberations
continue.

Gregg said he also believe the discussions have been intense, but
said the discussions are occurring at “10,000 feet” of generality and
problem identification and need to eventually focus on crafting a
specific plan.

“There is a seriousness of purpose,” Gregg said of the
deliberations, but added that reaching a detailed package will be
difficult.

Conrad and Gregg both agreed the long-term deficit outlook is
daunting.

Conrad said the nation needs to “focus like laser on the long-term
debt,” while also being mindful that the economy remains weak and
“unsteady.”

It is essential to develop a “serious and credible” deficit
reduction plan that “kicks in after the economy is more fully recovered,
but very soon,” he stressed

Gregg said he shares Conrad’s concern on the long-term outlook, but
the recent economic stimulus plan worsened the short-term deficit
situation without providing much economic growth.

“The stimulus package was misdirected,” Gregg said, calling it a
“woeful” plan that “aggravated the problem.”

The panel received testimony from John Taylor of Stanford
University, Alan Blinder of Princeton University and Mark Zandi of
Moody’s Analytics.

Of the three, Zandi was the most optimistic about the short-term
prospects of the American economy, but even his optimism was muted.

“The next six to 12 months will be uncomfortable as the economy
struggles to gain traction, but a full-fledged expansion should take
hold by this time next year,” he said.

But he added “given the halting recovery and the clear threats
remaining, it is not difficult to construct scenarios in which the
economy backtracks into recession,” he said.

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

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