The plan put forward Wednesday by the National Commission on Fiscal Responsibility and Reform required the okay of 14 of the commission's 18 members to gain official approval and be put before Congress as a proposal that must be voted on. The plan received 11 yes votes.
That we did not get to 14 votes does not mean that there is not powerful support for this plan from both parties in Congress, said Sen. Mike Crapo, R-ID.
Co-chair Erskine Bowles, a Democrat who served as President Bill Clinton's Chief of Staff, said the plan will provide a basis for lawmakers to work on the problem of the deficit.
Erskine called the plan an important first step forward and that it proves that our nation understands the perils of our ever increasing deficits and that the nation's leaders are prepared to do something, something real to address the issue.
In addition to Crapo and Bowles, the plan received yes votes from co-chair and former Wyoming Republican Senator Alan Simpson, former Clinton budget director Alice Rivlin, Sens. Richard Durbin, D-IL, Tom Coburn, R-OK, Judd Gregg, R-NH and Kent Conrad, D-ND, Rep. John Spratt, D-SC, CEO of Honeywell International David Cote and former chief executive of Young & Rubicam Ann Fudge.
In opposition were Sen. Max Baucus, D-MT, Reps. Jan Schakowsky, D-IL, Jeb Hensarling, R-TX, Paul Ryan, R-WI, Xavier Becerra, D-CA, and Dave Camp, R-MI, and Andrew Stern, president of the Service Employees International Union.
All of those opposing the plan had some good things to say about it. In general, Democrats in opposition thought cuts to Medicare and the raising of the Social Security qualifying age were unduly oppressive to poorer segments of the population, while Republicans who opposed the plan did not agree with removing tax breaks.
Crapo noted that economists who testified before the commission said that one of the most significant things we can do for the American economy is to have a plan, even a plan that not everyone can agree on.
This issue deserves consideration. This plan deserves a vote, Crapo said. Inaction is unacceptable.
The plan intends to reduce the national debt by $4 trillion by 2020, by cutting discretionary spending and eliminating tax breaks. It would eliminate earmarks, cut farm subsidies, freeze the defense budget and eliminate 200,000 federal jobs by attrition.
The plan would also gradually raise the Social Security retirement age to 68 by 2050 and 70 by 2075. The plans also proposes cuts to Medicare and Medicaid,
According to the plan, over $1.4 trillion of the savings would come from discretionary spending, over $700 billion from mandatory spending, over $700 billion from tax reforms, and over $600 billion from paying less interest on debt.
Under this proposal, in 2020, the budget deficit is projected to be to just $382 billion, or 1.6 percent of the projected 2020 GDP. By 2037, the budget would be balanced and then turned into surpluses in subsequent years.
The spending cuts would start gradually in 2012 in order to not disturb the fragile economic recovery, the commission said.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, which group backs the plan as a mature way forward in dealing with the nation's fiscal problems, said that the plan will find supporters even though it did not get the 14 votes.
I think the plan is great and it will get support , MacGuineas said. It does a lot on every area, which unfortunately is necessary.
AFL-CIO President Richard Trumka issued a statement denouncing the plan.
No proposal on fiscal issues is serious that leaves the Bush tax cuts for the rich in place while raising taxes on the middle class and slashing Social Security and Medicare, Trumka said, adding that all members of Congress should also oppose these job-killing policies if they are raised in future legislation or budgets.
John Irons, research and policy director for the Economic Policy Institute, said the rejection of the proposal should not be seen as a failure to take deficit reduction seriously, but rather that the policy approach adopted by the co-chairs is flawed.
The plan calls for serious belt-tightening beginning in just 10 months, even though the nation's unemployment rate will still likely be between 9 and 10 percent, Irons said.
The plan includes no concrete, immediate action to create jobs or to spur economic growth in the near term, Irons said.
Jonathan Cowan, president of the Third Way, which terms itself a moderate think tank of the progressive movement, applauded the commission for coming forward with a bold plan that takes a major step toward stabilizing the nation's finances.
We know this plan is going to be cannon fodder for the far left and far right, and that virtually everyone will find individual recommendations to quibble with, Cowan said. However, the Chairmen's recommendations provide a real, clear blueprint for addressing the long-term deficit. Passing this plan would prove to a skeptical public that Washington can face our major challenges. Failing to pass it will confirm the worst fears of the public and the world that the United States may no longer have what it takes.
President Obama thanked the commission for its work.
The Commission's report underscores that to sustain growth in the medium and long term we need to face some difficult choices to curb runaway debt, Obama said. It will require cutting the spending we don't need in order to invest in what's necessary to grow our economy and our middle-class. It will require all of us, Democrats and Republicans, to find common ground.
Obama said his economic team is studying specific proposals in the plan as we develop our budget and our priorities for the coming year.