Budget

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. 

Read more...

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

Read more...

Democratic Rep. Allyson Schwartz (Pa.) voiced her support Wednesday for Rep. Chris Van Hollen's bid to move into the House Budget Committee's ranking spot. 

In a letter to Democratic lawmakers today urging their support for Van Hollen, Schwartz said she backed his candidacy "because I believe that Chris’ leadership, commitment to taking on the toughest fights, and clear vision would serve House Democrats well on the Budget Committee."

Schwartz is first in line to take over as ranking member following House Budget Chairman John Spratt's loss in South Carolina. 

"I serve with Chris on Ways and Means, and I have seen first hand that he has the right skills and right ability to serve as ranking member of the House Budget Committee."

Read more...

Rep. Chris Van Hollen (D-Md.) is asking his colleagues for their support in his bid to move into the ranking member's spot on the House Budget Committee. 

The move would put Van Hollen into the middle of the spending battle expected to ensue with incoming House Budget Chairman Paul Ryan (R-Wis.) at the helm. 

The Budget Committee "will be a central front in this national conversation about how to accelerate job creation and economic growth," Van Hollen said Wednesday in letter. "This will not just be a fight over numbers. It is ultimately a debate about who we are and the future direction of our country."

Ryan has proposed his own budget plan that includes changes to Medicare and Social Security, the tax code and healthcare. 

"Our Republican colleagues have made clear their plan to use the budget process to provide a $700 billion tax cut for the wealthiest Americans by adding to our national debt and slashing education and other investments that are necessary for America to compete in the global economy," Van Hollen wrote to his colleagues. 

Read more...

Rep. Chris Van Hollen (Md.), the outgoing chairman of the Democratic Congressional Campaign Committee, will seek the top Democratic post on the House Budget Committee, a source close to the congressman told The Hill.

Van Hollen now serves in the appointed post of assistant to the Speaker in the Democratic leadership, but his future was uncertain as party leaders jostle for a decreasing number of top posts in the minority.

The Maryland Democrat spent Tuesday calling members of the Budget Committee and the broader Democratic caucus. He received "overwhelming and uniformly positive responses" and plans to announce his candidacy for the ranking member position Wednesday, the source close to the lawmaker said.

Read more...

Newly elected Republicans are sticking to their campaign messages of cutting government spending and debt by threatening to block an increase in the federal government's debt ceiling. 

The first showdown on spending and debt could come sometime in February on a vote on whether to increase the amount of debt the federal government can assume. 

Sens.-elect Rand Paul (R-Ky.) and Mike Lee (R-Utah) are just two of those arguing against an increase in the debt ceiling, a possibly dangerous prospect for the U.S. and global economy. Sen.-elect Ron Johnson (R-Wis.) also is likely to join the chorus. 

"I would vote against raising the national debt ceiling," Lee said recently on PBS. "Again, this is about mortgaging the future of unborn generations of Americans. It's a form of taxation without representation. I don't think we can do that."

Read more...

Sen. Kent Conrad (D-N.D.) said he may step down as chairman of the Budget Committee to take over Agriculture.

Read more...