Updated: 5:55 p.m.
The final recommendations offered Wednesday by the chairmen of President Barack Obama’s bipartisan fiscal commission look very much like the duo’s initial proposal — nearly $4 trillion in deficit reduction over the coming decade — and the proposals are likely to do little more than provide a marker for deficit negotiations next year.
The final draft includes many of the elements that have been ripped by lawmakers on both sides of the aisle — a Social Security retirement age that would reach 69 in 2075 instead of the 67 in current law, significant cuts in domestic and military spending, and $1 trillion in higher tax revenue by eliminating many tax deductions and enacting a 15-cents-a-gallon gas tax. But the recommendations spread out some benefits too — boosting payouts to low-income seniors, for example, and lowering tax rates dramatically with savings from eliminating most deductions. And the commission proposes a payroll tax holiday in 2011 to boost the economy while delaying austerity measures until 2012.
Former GOP Sen. Alan Simpson (Wyo.) and former Clinton administration official Erskine Bowles lead the fiscal commission.
The plan would effectively cut in half the projected $8 trillion deficit over the next 10 years and put the country on a sustainable long-term trajectory, according to projections.
But with the commission’s chairmen unlikely to find the support of 14 of 18 members to back the plan or anything close to it, the ball will likely be kicked into Obama’s court as he puts together his fiscal 2012 budget early next year. Obama in the past has offered relatively small budget cuts and this week proposed a two-year freeze in civilian federal wages, but Republicans are hoping he goes further and offers a robust deficit reduction package.
The commission plan has already been dismissed by liberals in the president’s party, including Speaker Nancy Pelosi (Calif.), who has opposed raising the retirement age.
But the plan did get early support Wednesday from Senate Budget Chairman Kent Conrad (D-N.D.) and ranking member Judd Gregg (R-N.H.), and the commission’s efforts were praised by fiscal moderates, including House Majority Leader Steny Hoyer (D-Md.), the Blue Dog Coalition and the New Democrats, although they stopped short of endorsing the proposal in its entirety.
While the plan includes more than $2 in budget cuts for every $1 in tax increases, Republicans have been wary of signing on to any plan that raises taxes.
Republicans and Obama are already negotiating separately the issue of extending the expiring Bush-era tax cuts. Extending all the cuts costs nearly $4 trillion over a decade.