Budget

Speaker Nancy Pelosi (D-Calif.) called the proposals “simply unacceptable” while the two men battling to be her deputy released muted responses.

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With support solidified on the House Budget Committee, Rep. Chris Van Hollen (D-Md.) is poised to become the panel's ranking member in the next Congress. 

Van Hollen has endorsements from all 17 returning Democrats on the committee, including Rep. Allyson Schwartz (Pa.), who's next in line to take the top Democratic post. 

House Budget Chairman John Spratt (D-S.C.), who lost his bid for a 15th term in last week's elections, also backed Van Hollen for the job. 

Van Hollen officially announced his bid Wednesday to become the Democrats' ranking member and has spent the past couple of days canvassing his party for support. 

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The draft report released by the co-chairmen of President Obama's fiscal commission is a "starting point" for an "important discussion," Senate Majority Leader Harry Reid (D-Nev.) said Thursday.

Reid said that even though he does not agree with every recommendation made by former Clinton Chief of Staff Erskine Bowles and former Sen. Alan Simpson (R-Wyo.), the report could spur debate on the nation's debt and deficit.

"While I don't agree with every one of their recommendations, what they have provided is a starting point for this important discussion," he said in a statement. "I look forward to the full commission's recommendations and to working with my colleagues on both sides of the aisle to address this important issue."

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Rep. Chris Van Hollen (D-Md.) got a nod Wednesday from outgoing House Budget Chairman John Spratt (D-S.C.) to lead the panel's Democrats. 

Van Hollen today officially announced his bid to become the Democrats' ranking member following the midterm elections in which Spratt lost his race and Democrats lost control of the House. 

In a letter to his colleagues, Spratt said the panel will "play a critical role" in the 112th Congress and Van Hollen "is more than up to that challenge, and I am pleased to see him seek the position."

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Sweeping reforms to Social Security, Medicare and the tax code get poor reviews from liberals and unions.

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In a draft proposal, President Obama's fiscal commission touched what is often described as the "third rail" of American politics: Social Security.

Panel co-chairmen Erskine Bowles and Alan Simpson proposed sweeping changes to the government pension program for the elderly that they say will keep the program solvent for 75 years.

Under the plan, the number of people eligible to receive Social Security benefits at any specific point would be reduced by raising the retirement age. The retirement age would increase by one month every two years after it reaches 67 under current law, meaning it would reach 68 by 2050 and 69 by 2070. 

Benefit levels would also be reduced for most future retirees, though Bowles and Simpson recommend a minimum benefit level for lifetime low-income earners that would boost the amount they currently receive. The new benefit formula would be phased in by 2050.

The proposal would also inject more cash into Social Security's coffers by increasing the percentage of taxable wages to 90 percent by 2050, which would prevent the percentage from falling to 82.5 percent by the end of the decade. 

Drastic changes to Social Security, perhaps the most contentious element of the plan, are far from guaranteed to be put into place. The proposal has not been approved by 14 of the 18 members of the bipartisan panel. 

But the commission has come under pressure from liberal lawmakers and activists who oppose dramatic changes to Social Security, arguing that the program — solvent until 2037 if no changes are made —should not be used as a vehicle for debt reduction. 

Likewise, Bowles and Simpson said that the changes would not count against reducing the national debt.

"Reform Social Security for its own sake, not for deficit reduction," they wrote. 

But other advocates and lawmakers have argued that sweeping changes are needed to keep the program solvent for future retirees.

The Social Security trust fund currently has a surplus of $2.5 trillion, but that is supposed to run out in 27 years due to the rapid retirement of Baby Boomers. 2010 was the first year that Social Security benefits payments outpaced contributions.

Bowles and Simpson wrote that their plan will prevent a 22 percent across-the-board benefit cut projected to occur in 2037.

On the heels of a preliminary report to reduce federal spending and debt, the Treasury Department reported a $140.4 billion budget deficit in October on Wednesday. 

The deficit last month was 20 percent lower than the same time a year ago but is the third highest October imbalance on record, down $35.9 billion from that high, Treasury announced Wednesday. 

The highest October deficit, the first month of the new fiscal year, was $176.4 billion in October 2009.

Despite the decrease, fiscal 2011 could likely be the third straight year where deficits top $1 trillion. 

Today's preliminary report from the fiscal commission would trim $4 trillion between 2012 and 2020 through spending reductions throughout the budget, changes to the tax code and reforms to entitlement spending.

Sen. Judd Gregg (R-N.H.), a member of the National Commission on Fiscal Responsibility and Reform, said Wednesday's preliminary proposal is "an aggressive and comprehensive plan" for reducing federal debt and spending. 

Gregg, the ranking member of the Senate Budget Committee who is retiring from Congress, said he looked "forward to reviewing it in depth and hopefully improving on it."

"It is critical to our nation’s future that we take action that puts the country and our children’s future back on sound financial ground," Gregg said in a statement. "This will not be the final proposal, but it is a significant step down the path of establishing fiscal responsibility."

The final report, which is designed to provide a road map on how to balance the budget by 2015, is expected to be released by the Dec. 1 deadline, Gregg said. The preliminary report, released Wednesday, wasn't expected. 

Republican Sen. Jim DeMint (S.C.) will propose an earmark ban at the Republican Conference meeting next week with the backing of at least 13 lawmakers. 

The earmark moratorium is supported by Sens. DeMint, Tom Coburn (R-Okla.), John Ensign (R-Nev.), Mike Enzi (R-Wyo.) and John Cornyn (R-Texas). Sens. Richard Burr (R-N.C.) and Jeff Sessions (R-Ala.) have also signed as co-sponsors, along with Sens.-elect Pat Toomey (R-Pa.), Marco Rubio (R-Fla.), Rand Paul (R-Ky.), Mike Lee (R-Utah), Ron Johnson (R-Wis.) and Kelly Ayotte (R-N.H.).

"Americans want Congress to shut down the earmark favor factory, and next week I believe House and Senate Republicans will unite to stop pork-barrel spending," DeMint said Wednesday in a statement. "Instead of spending time chasing money for pet projects, lawmakers will be able to focus on balancing the budget, reforming the tax code and repealing the costly healthcare takeover."

Senate Minority Leader Mitch McConnell (R-Ky.) has said any campaign to eliminate earmarks is a distraction from larger spending cuts that need to be made. He's also argued that giving up earmarks would give the executive branch too much power to spend money on its priorities. 

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A preliminary report released by President Obama's fiscal commission proposes spending cuts and dramatic changes to Social Security.

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