By Walter Alarkon - 07/07/10 10:00 AM EDT
A White House commission tasked with winding down trillion-dollar deficits has won a boost from Congress’s leading GOP budget hawks, who say it is off to a strong start.
Rep. Paul Ryan (Wis.) and Sen. Judd Gregg (N.H.), the senior Republicans on the House and Senate Budget committees have praised a proposal by the fiscal panel’s Democratic co-chairman, Erskine Bowles, to limit government spending and revenue to 21 percent of gross domestic product.
“I like Erskine a lot,” Ryan said of Bowles, a former White House chief of staff in the Clinton administration. “He’s becoming my new favorite Democrat. He’s in the ballpark. We’re getting near the target if that’s the case.”
Gregg said spending and revenue limits like the ones Bowles has suggested would be “incredibly positive.”
“Get spending down and revenues up. … That would be very close to a stable situation,” Gregg told The Hill.
Members of both parties have doubted that the fiscal commission, created by President Barack Obama to consider spending, tax and entitlement policy reforms, can get the bipartisan support needed for an agreement.
Fourteen of the commission’s 18 members must approve recommendations before they can be sent to Congress for up-or-down votes. And since the panel includes six congressional Democrats, six members chosen by Obama and six Republicans, at least two GOP lawmakers must sign on to the final agreement for it to advance. Obama wants the commission to report out recommendations by Dec. 1.
Bowles and Obama have said that “everything is on the table” when it comes to the commission’s work.
Rep. Jan Schakowsky (D-Ill.) has said she’s “skeptical” the commission can get much done, particularly because Republicans have been averse to tax increases. GOP leaders in both chambers had initially been reluctant to name Republican lawmakers to the panel because of fears it could call for such hikes — anathema in the party.
But endorsements by Gregg and Ryan for Bowles’s idea could give GOP panel members cover to support its recommendations.
Gregg said most members of the commission are making a genuine effort to forge some sort of deal.
“There may be a few members that don’t feel that way, but I think there are easily 14 members right now that understand we have to do something,” Gregg said.
To hit Bowles’s targets, spending would have to come down. This year, federal spending is equal to about 24 percent of GDP, according to the Congressional Budget Office (CBO). That number is expected to rise over the next few decades as entitlement costs, especially for healthcare, grow.
To balance the budget at Bowles’s recommended spending levels, revenues would still have to go up. Federal revenue is at 15 percent this year, below the historical average of about 18 percent. (The historical average for spending is 18.5 percent.) CBO projects revenue will rise to about 19 percent under a scenario in which Bush-era tax cuts for the middle class are extended — as Democrats aim to do — and other tax rates remain roughly constant.
Bowles, in laying out his general targets at a fiscal commission meeting last week, said the last time the federal government had a balanced budget — in the late 1990s — spending and revenue were lower than 21 percent as a share of the economy.
He noted that a recently enacted budget enforcement tool, the pay-as-you-go law, has been waived multiple times by Democratic leaders seeking to pass items they considered “emergency spending.”
Reaching the spending and revenue target levels is not going to be easy, Bowles acknowledged. To help the commission get there, Bowles laid out an ambitious agenda that involves greater scrutiny on defense spending, reductions to other discretionary spending, more healthcare savings and reforms to the tax code.
Rep. Xavier Becerra (D-Calif.), a liberal on the fiscal commission, wouldn’t rule out backing spending or revenue targets, but he said the commission must first understand the range of options.
“Are we still Iraq or Afghanistan during this particular threshold? If we are, how are we paying for it?” Becerra said in an interview. “Are we finding ways to better control private-sector costs for healthcare? ... You’re seeing only the product of an equation without knowing what the variables are.”