–House Speaker Pelosi Takes Hard Line Against Social Security Changes
–Rep. Pelosi Appears To Quash Social Security Reform Ideas
–Congressional Republicans Back $2 Trillion Renewal of Bush Tax Cuts
–Hill GOP Brushes Aside Fiscal Warnings of Greenspan, Bernanke

By John Shaw

WASHINGTON (MNI) – It may be with good reason that many are hoping
President Obama’s fiscal responsibility commission conjures up a miracle
and produces a credible, long-term budget plan.

For Democrats and Republicans on Capitol Hill are showing little
inclination to make any even rhetorical concession on key fiscal matters
— concessions that are essential if a serious deficit reduction package
is ever to be assembled and approved.

In recent weeks, Democrats and Republicans have appeared to harden
their positions on key fiscal matters. This is unsurprising given that a
critical midterm election is only four months away. But it will make
securing an agreement even harder to achieve.

“Clearly everyone has shifted into election mode,” said Bill
Frenzel, a former Republican congressman who is now a guest scholar at
the Brookings Institution.

“Neither party seems eager to offer any hints of being willing to
make fiscal concessions. Instead, they are moving in the other
direction,” he said.

“I always get nervous before elections,” said Bob Bixby, executive
director of the Concord Coalition, a budget watchdog group.

“It’s a danger zone in which people from both parties say things
that box themselves in from actually solving problems after the
election. Campaigns invite people to repudiate hard choices,” he added.

A few weeks ago, House Majority Leader Steny Hoyer signalled that
he would be open to making some adjustments in Social Security as part
of a broad plan to overhaul the key program. Hoyer said the program
needed to better balance its revenues and expenditures by possibly
increasing the retirement age for full eligibility.

But days after Hoyer’s remarks, House Speaker Nancy Pelosi not only
distanced herself from Hoyer’s comments but flatly contradicted them.

At her final weekly briefing of the summer, Pelosi said that she
strongly opposes increasing the Social Security retirement age, even as
part of a broad effort to confront long-term fiscal challenges.

“We should not balance the budget by raising the Social Security
age,” Pelosi said.

Ensuring the long-term solvency of Social Security and balancing
the federal budget are distinct issues which should not be joined, she
argued.

Pelosi said there are “many ways” to implement long-term deficit
reductions. “Let’s not start by raising the retirement age,” she said.

If Pelosi seemed to quash the prospects of Social Security reform,
congressional Republicans have been dismissive of any effort to pay for
the renewal of the Bush tax cuts of 2001 and 2003.

They have brushed aside the suggestion of former Federal Reserve
Board Chairman Alan Greenspan that if Congress wants to renew the Bush
tax cuts these should be paid for.

In remarks to reporters Tuesday, Senate Minority Leader Mitch
McConnell said all of the tax cuts passed in 2001 and 2003 should be
renewed, not just those for individuals making up to $200,000 and
couples making up to $250,000 as Obama has supported.

“We look forward to that debate,” McConnell said.

He said that Republicans will press Democrats to explain “why it’s
a good idea to raise taxes in the middle of a recession.”

Senate Minority Whip Jon Kyl said tax increases are not the way to
reduce the nation’s budget deficits. “You can’t tax your way out of this
problem. You grow,” Kyl said.

Both the administration and congressional Democrats have said that
tax cuts for individuals making up to $200,000 and couples earning up to
$250,000 should be extended without offsets.

The cost of extending these tax cuts would be about $1.4 trillion
over a decade. Extending all of the ’01 and ’03 tax cuts would cost more
than $2 trillion over a decade.

Frenzel said that with Congress deadlocked over fiscal matters,
policymakers in Washington appear to be pinning their hopes on the work
of the presidential commission on fiscal responsibility chaired by
former White House chief of staff Erskine Bowles and former senator Alan
Simpson.

“I think a lot of people on the Hill are depending on this
commission to rescue them. But the commission is going to find it very
hard to get 14 of the 18 members to sign on to a hard-hitting program,”
Frenzel said. (The rules of the commission are that a final report
requires the support of 14 of the 18 members.)

Frenzel said he hopes that if Simpson and Bowles can put together a
plan that the majority of the panel support “it could help frame the
fiscal debate for next year.”

“No one else is doing anything positive to help us solve this
problem next year,” Frenzel says.

Bixby said that while he believes the Bowles-Simpson commission can
do “some positive things” he is concerned that it has given lawmakers
“cover to avoid making hard choices now. Everyone can say, let’s just
wait and see what the commission comes up with.”

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

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