–On Bloomberg TV, Simpson and Bowles Say Deficit Deal Is Urgent
–Bowles: Only 20% Chance of Big Fiscal Deal; 50% Chance of Any Deal
–Bowles: U.S. Debt Downgrade Is ‘Very Possible
–Simpson: Deficit Panel Members ‘Know What To Do’

By John Shaw

WASHINGTON (MNI) – Former White House chief of staff Erskine Bowles
and former Senator Alan Simpson, the co-chairs of the president’s fiscal
commission, Tuesday said Congress’ new deficit reduction panel should
try to secure at least $4 trillion in ten year budget savings.

In an interview on Bloomberg TV, prior to their appearance later in
the day before the deficit reduction panel, Simpson and Bowles said the
panel must find a way to secure a broad, bipartisan agreement to cut the
deficit substantially.

“This is heavy lifting,” said Simpson who said the panel’s 12
members “know what to do” to reduce the budget deficit.

Bowles said he believes a deficit reduction package of $4 trillion
over a decade is “the minimum amount” to get the nation’s debt
stabilized.

He said proposals by Democrats and Republicans in the panel to
secure between $2 trillion and $3 trillion in savings is insufficient.

“It’s not enough. It won’t solve our problem,” Bowles said, adding
that he fears another downgrade of the U.S.’s debt is “very possible.”

Bowles said delaying the final report would not solve anything,
since the elements of the fiscal problem are well known as are the
possible solutions.

“I think it would be a mistake,” to delay the report, Bowles said.

Bowles said a credible deficit reduction plan would include health
care reform, savings from defense and additional revenues coming from
reducing or eliminating tax expenditures.

Bowles said he believes there is only a 20% chance the panel will
get the $4 trillion deficit cut deal that he supports. He added that he
believes there is a 50% chance it will reach its statutory goals.

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.

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

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