November 30, 2010 / 3:22 PM / 7 years ago

Short on votes, deficit panel delays decision

<p>President Barack Obama leaves the lecturn following remarks speaks about federal worker wage freezes in the Eisenhower Executive Office Building near the White House in Washington, November 29, 2010.Jason Reed</p>

WASHINGTON (Reuters) - A presidential commission looking for ways to slash the budget deficit postponed final action on Tuesday on a bold fiscal austerity plan after it was unable to gather enough support among panel members.

In a stark display of deep political divisions over tax and spending issues, the 18-member panel led by co-chairmen Alan Simpson and Erskine Bowles put off until Friday a final vote on their plan, which is expected to be unveiled on Wednesday.

The delay underscored the difficulty Bowles and Simpson face in nailing down 14 votes of support, a threshold that would trigger a congressional vote on their plan and fulfill President Barack Obama's mandate for the commission.

Bowles vowed at a press conference to stick close to the draft plan he and Simpson first unveiled on November 10.

"It's not going to be some watered-down version. ... That I can guarantee you," said Bowles, formerly chief of staff for Democratic President Bill Clinton. A vote on the plan had previously been expected on Wednesday.

The White House said it supported the commission's decision to postpone the vote by two days to build more consensus.

After months of meetings and debate, the commission has painted a harsh picture of the fiscal choices ahead for the United States, while showing how difficult it is to achieve bipartisan consensus on facing up to them.

The Bowles-Simpson draft plan called for sharp spending and benefit cuts and a major tax code overhaul to achieve $4 trillion in deficit reduction over 10 years. The two have been working from that draft, but broad support has been elusive.

Liberals want to protect benefit programs like Social Security, Medicare and Medicaid from deep cuts, while Republicans refuse to consider tax increases.

Most budget experts say both will be needed to seriously tackle the huge federal deficit.

14 Votes Not There-Schakowsky

Democratic Representative Jan Schakowsky told Reuters Bowles and Simpson were still seeking support for the plan and that 14 votes had not been nailed down. "I don't see that, no, at least not right now," she said

Representative Jeb Hensarling, a Republican commission member, told Reuters on Tuesday any budget-balancing plan was better than none but that he was disappointed because the commission's plan recommends tax increases.

"We do not favor tax increases," said Hensarling, echoing the message of most conservative Republicans.

Simpson, a former Republican senator and veteran like Bowles of Washington's long-running deficit wars, said he expects the final plan to draw sharp criticism from all sides.

"They're going to rip this thing to shreds and do it with zeal," Simpson said. "We will listen now in the next few days to the same old crap I've been dealing with in all my public life -- emotion, fear, guilt and racism. When people use emotion, fear, guilt and racism on you, you use facts on them, which really irritates them."

White House spokesman Robert Gibbs said Vice President Joseph Biden had lunch on Tuesday with Bowles and Simpson.

The $1.3-trillion deficit, near levels not seen since World War Two, adds annually to the fast-rising national debt. The International Monetary Fund estimated gross U.S. government debt, counting the Medicare and Social Security programs, to be 92.7 percent of gross domestic product, or GDP.

That compares to 225.9 percent in Japan, 118.4 percent in Italy, 84.2 percent in France and 81.7 percent in Canada.

A CNBC-AP poll on Tuesday found a high level of U.S. public concern over the issue, with 54 percent of those surveyed saying taxes will have to be raised and services cut.

Voters vented their concerns about the deficit earlier this month, but financial markets have registered little worry.

Investors continue to pour money into U.S. Treasury bonds. With another sovereign debt crisis -- this time in Ireland -- rocking Europe, U.S. debt still looks like the world's safest capital haven, though budget hawks warn this could change quickly if markets lose faith in U.S. credit-worthiness.

Balance by 2015 the Goal

The National Commission on Fiscal Responsibility and Reform, the panel's formal name, was set up to find ways to balance the budget, excluding interest payments on the debt, by 2015 and "meaningfully improve the long-run fiscal outlook."

Obama underscored his deficit concern on Monday by calling for a two-year freeze on civilian U.S. federal worker pay, but no substantive action is expected this year on the deficit.

Whether Congress tackles it next year will depend in part on the Bowles-Simpson commission's result. That will be decided not just by how many, but whose votes back the plan, said Michael Linden, associate director for tax and budget policy at the Center for American Progress, a liberal think tank.

The commission has six members who are not in Congress and 12 who are, including some powerful committee chairmen.

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