–Simpson-Bowles Deficit Reduction Plan Is Approved on 11-7 Vote
–Deficit Plan Will Not Be Sent To Congress, But May Shape Hill Budget
–Senate Majority Whip Durbin Says Plan Should Begin ‘Adult Debate’

By John Shaw

WASHINGTON (MNI) – The National Commission on Fiscal Responsibility
and Reform voted Friday to support a nearly $4 trillion deficit
reduction plan, but the package failed to garner the 14 votes that are
needed to send it directly to Congress for prompt consideration.

The plan was approved on a 11 to 7 vote.

The two co-chairmen of the National Commission on Fiscal
Responsibility and Reform, former senator Alan Simpson and former White
House chief of staff Erskine Bowles, said they believe their plan will
reshape the nation’s fiscal debate.

The Simpson-Bowles plan calls for about $4 trillion in deficit
reduction between 2012 and 2020. To achieve this, they call for $1.6
trillion from discretionary savings, $556 billion in entitlement
savings, $785 billion by scaling back so-called “tax earmarks,” and $673
billion in interest savings.

The plan would bring the federal budget deficit down to 2.3% of
gross domestic product by 2015. It would reduce the nation’s debt to 60%
of GDP by 2023 and to 40% of GDP by 2035.

To achieve these fiscal goals it would force sweeping changes to
the federal budget, changes far beyond what any Congress or
administration has even contemplated, let alone accepted.

The plan would wring deep savings out of every corner of the
federal budget, including defense and Social Security.

The plan calls for fiscal changes that would bring federal spending
down to about 21% of GDP and boost revenues to bring them up to 21% of
GDP.

“This is the moment of truth,” Bowles said, adding that the
policies needed to fix the nation’s deficit problem are “going to be
painful.”

“This report is merely the first step,” he said.

Senate Majority Whip Dick Durbin, the second ranking Senate
Democrat, said he decided to support the plan despite deep misgivings
about its various elements.

The plan, Durbin said, is needed to “kick start an adult
conversation” on the nation’s deficit problems.

Durbin said he is encouraged that policymakers are now focusing on
the nation’s fiscal problems, but said he is disappointed by the
“irrational, unreal discussion” to renew all of the Bush era tax cuts at
a cost of $4 trillion over a decade at the same time deep spending cuts
and fundamental tax reform are being contemplated.

Senate Budget Committee Chairman Kent Conrad said the plan
represents “an important beginning” and sends an “important message”
about the urgency for fiscal reform.

“We have changed the conversation in the country … . This is not
the end of the story,” he said.

Andy Stern, president of the Service Employees International Union,
said the Simpson-Bowles plan represents an “enormous, tectonic paradigm
shift” on fiscal policy.

“This is the issue of our time that needs to be solved,” he said.

Three Republican lawmakers supported the plan — Sen. Judd Gregg,
Sen. Tom Coburn, and Sen. Mike Crapo — and three Democratic lawmakers
supported the plan — Sen. Durbin, Sen. Conrad and Rep. John Spratt.

Gregg is retiring and Spratt was defeated for re-election. Spratt,
the current chairman of the House Budget Committee, said the plan is
politically difficult for a Democrat to back.

“Thank God I’m not running again,” he quipped.

Budget experts agree that the key test of the importance of the
commission will come when President Obama and congressional leaders
submit their fiscal year 2012 budgets early next year.

Rep. Paul Ryan, the incoming chairman of the House Budget
Committee, opposed the plan, but has said he will incorporate many of
the elements of the Simpson-Bowles package into his budget that he will
release next February or March.

Obama created the commission on Feb. 18 by executive order after an
attempt by lawmakers to create a panel by statute failed in the Senate.

The commission was charged to issue a report by Dec. 1 that would
cut the deficit to about 3% of gross domestic product by fiscal year
2015 and begin slowing the growth of debt over the long term.

The commission included the chairmen and ranking members of the
Senate and House Budget committees, the chairman of the Senate Finance
Committee, and a former White House budget director and vice chairman of
the Federal Reserve Board. It also included business leaders and labor
representatives.

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

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