–Bipartisan Policy Center Says Group Should Secure $1.65T Savings Now
–Think Tank Says Deficit Panel Should Instruct Hill Panels To Find More
–Think Tank Also Urges Payroll Tax Holiday To Spur Growth

By John Shaw

WASHINGTON (MNI) – Congress’ deficit reduction panel has received a
lot of advice in recent weeks, but much of it has been of the vague
aspirational variety.

The Bipartisan Policy Center has submitted a detailed three-step
plan to achieve about $5 trillion in ten year savings as part of the
testimony of former Senate Budget Committee Chairman Pete Domenici and
for White House budget director Alice Rivlin.

Domenici and Rivlin chaired a deficit reduction task force last
year under the auspices of the Bipartisan Policy Center which called for
more than $4 trillion in deficit reduction.

In a detailed appendix to their prepared remarks, Domenici and
Rivlin outline a three-step process that secures about $5 trillion in
budget savings.

First, they cite the roughly $900 billion in savings that was
achieved in this summer’s debt limit agreement by making downward
adjustments in discretionary spending. This is the first part of the
deficit reduction effort.

Second, they suggest securing about $1.65 trillion in 10 year
savings in the coming weeks, coupled with a one year payroll tax holiday
for employees and employers that would cost about $450 billion. This
would lead to a net $1.2 trillion in budget savings.

It would be achieved by about $600 billion in health care savings,
$350 billion in other entitlement savings, some of which would be
generated by switching to the chained CPI, $450 billion in savings by
cutting back on tax expenditures, $100 billion in additional
discretionary cuts and $150 billion in interest savings.

When these savings are subtracted by the cost of the payroll tax
holiday, the net budget savings would be $1.2 trillion, the Bipartisan
Policy Center says.

Finally, the budget group says the deficit committee should call on
several congressional committees to submit legislation next year that
overhauls the tax code and makes health care and Social Security
reforms.

According to the Bipartisan Policy Center, this approach would
yield $2.8 trillion in spending cuts (including interest savings) and
$2.2 trillion in additional revenues. The total budget savings would
reach $5 trillion.

There has been growing discussion in Congress that the new deficit
panel should submit its deficit reduction package in several distinct
phases, with at least $1.2 trillion in 10 year savings now and up to $3
trillion in ten year savings by next year.

The Bipartisan Policy Center said the congressional deficit
reduction panel has been given “broad powers of an unprecedented nature”
and should use them to secure historic budget savings.

Congress’ Joint Select Committee on Deficit Reduction is charged
with submitting 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.

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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