–Senate Budget Chief Conrad Embraces Simpson-Bowles As His Plan
–Republicans Hammer Senate Dems For Failure To Vote on Budget Options
–Senate GOP Leader Breaks With House GOP On FY’13 Spending Level
–House GOP, Senate Dems Stage Largely Symbolic Tax Votes

By John Shaw

WASHINGTON (MNI) – After months of deliberation about how to frame
this year’s budget debate on Capitol Hill, Senate Budget Committee
Chairman Kent Conrad decided to introduce the Simpson-Bowles deficit
reduction plan as his fiscal year 2013 budget resolution.

Conrad’s decision this week to embrace Simpson-Bowles received a
generally favorable response among many Democrats and some Republicans.

But the Senate Budget chairman received withering attacks from the
GOP for his refusal to consider amendments to his package or allow for
votes on alternative budgets when the Budget Committee met Wednesday to
consider Conrad’s plan.

Conrad said that it would be premature and even counterproductive
to hold votes on the Simpson-Bowles framework this spring.

Conrad said the Simpson-Bowles plan represents “the best blueprint
to build” a bipartisan consensus for a major deficit reduction package,
but added that this consensus will probably not come together until
after the November election.

“Many have suggested we will not be able to reach conclusions until
after the election. I wish that weren’t the case, but it probably is,”
Conrad said during the Budget Committee’s deliberations.

Conrad said developing a bipartisan budget agreement will take
months of discussions and negotiations which should begin immediately.

“The ground has to be plowed now,” Conrad said.

But the Republican senators on the committee hurled criticism and
scorn on Conrad and especially on Senate Majority Leader Harry Reid —
who has been saying for months that the Senate did not need to vote on a
budget resolution this year because last year’s debt ceiling accord made
key fiscal decisions.

“His (Conrad’s) leadership lowered the boom,” Republican senator
John Thune said.

“Now we’re going to have a dog and pony show without a dog and
pony. It’s a charade,” Thune said.

Sen. Jeff Sessions, the top Republican on the Budget Committee,
said he was “deeply disappointed” about Conrad’s decision not to allow
any votes on his budget or any amendments during the Budget Committee’s
deliberations.

He blasted Senate Democrats for having a “systematic plan … to
avoid votes on budgets” over the past several years. Sessions said
Democrats are guilty of an “abdication of responsibility” on fiscal
matters.

Sen. Chuck Grassley, another Republican on the panel, said he was
“puzzled” and “confounded” by the Senate Budget Committee’s session
which did not allow for amendments or alternative budgets.

“This exercise would be humorous if the consequences for this
inaction were not so serious,” he said.

The Simpson-Bowles plan calls for more $5.4 trillion in deficit
reduction over a decade, with a mix 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.

Bob Bixby, executive director of the Concord Coalition, praised
Conrad’s decision to offer the Simpson-Bowles framework. “The easy
course would have been simply to lay out one more partisan budget plan
to argue over. Instead he is doing something more valuable,” Bixby said.

“This ambitious deficit reduction plan would put the country on a
more responsible course without jeopardizing the economic recovery. It
puts everything on the table, dealing with defense, regular domestic
spending, the entitlement programs and tax reform,” he added.

Several weeks ago, the House approved House Budget Committee
Chairman Paul Ryan’s budget resolution on a 228 to 191 vote. All
Democrats opposed the GOP budget; all Republicans, except for 10, voted
for Ryan’s plan.

Ryan has said his budget would cut spending by $5 trillion more
than would Obama’s budget over a decade and would reduce deficits by
$3.3 trillion more than would the president’s budget.

Ryan’s budget makes deep cuts in the projected growth of federal
spending and endorses the fundamental overhaul of Medicare, Medicaid and
welfare programs. It also calls for repealing the 2010 health care law.

Ryan’s budget backs the extension of Bush-era tax cuts and
undertaking fundamental tax reform in which the current six individual
rates would be collapsed into two rates, 10% and 25%. The corporate rate
would be cut to 25%. He argues that so-called tax expenditures should
be sharply curtailed, but does not say which ones should be eliminated
or reduced.

Ryan also calls for enacting a package of spending cuts to prevent
the $110 billion in across-the-board spending cuts that are scheduled to
begin next January.

Ryan’s budget sets FY’13 discretionary spending at $1.028 trillion,
$19 billion below the $1.047 trillion that was allowed for in last
summer’s debt ceiling agreement.

The level of discretionary spending for FY’13 has the potential to
become a major political fight this summer and spring.

Democrats say last summer’s debt ceiling agreement settled on
$1.047 trillion as the discretionary spending level for the coming
fiscal year.

However, House Speaker John Boehner and House Majority Leader Eric
Cantor have said the $1.047 trillion number in the agreement was the
“ceiling” for spending and claim the accord allows for less spending.

The Boehner-Cantor interpretation of the debt ceiling accord was
quietly but significantly challenged this week by Senate Republican
Leader Mitch McConnell when he joined all Democrats on the Senate
Appropriations Committee and all but two Republicans on the panel in
setting total discretionary spending for FY’13 at $1.047 trillion.

Senate Majority Leader Harry Reid and other Democrats have accused
House Republican leaders of walking away from their debt ceiling
agreement last summer.

Finally, the House and Senate held competing tax votes this week
that appeared to be more motivated by political messaging than a desire
to change tax law.

Senate Democrats set up a Monday evening procedural vote on the
“Buffett Rule” bill which would have set a minimum effective tax rate
for high-income earners. The bill pushed by Senate Democratic leaders
would require people who earn more than $1 million annually to pay a
minimum tax rate of up to 30%.

To advance in the Senate the bill required 60 votes, but it secured
only 51 votes.

The House passed Thursday a bill drafted by House Majority Leader
Eric Cantor that would allow firms with fewer than 500 employees to take
a tax deduction equal to 20% of their active business income.

Cantor argued that it would spur small business job creation.”We
believe in helping all small businesses,” Cantor said during the House
debate.

Cantor has said the one-time tax cut would cost $47 billion and
would not be offset.

The bill was approved on a 235 to 173 mostly party line vote. It
now goes to the Senate where it faces an uncertain fate.

Reid, the Senate Democratic leader, blasted the House GOP bill as
“laughable” and said Senate Democrats will press its own alternative
next month.

The White House opposes Cantor’s tax cut bill.

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

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