Debt commission’s plan wins support from lawmakers but still faces hurdles

Seven members of President Obama’s debt commission on Wednesday offered their support to a new deficit-reduction plan unveiled by the commission’s chairmen.

The votes of confidence lifted hopes that the proposal could move forward, though it still faces an uphill climb to win the 14 votes necessary to be adopted by the commission at a vote scheduled for Friday. 

While Senate Budget Committee Chairman Kent Conrad (D-N.D.) and retiring ranking Republican Sen. Judd Gregg (N.H.) announced they would back the proposal, several House Republicans on the commission signaled opposition. 

It’s also unclear whether the commission’s liberals will support the proposal written by the two chairmen, Democrat Erskine Bowles and former Sen. Alan Simpson (R-Wyo.).

House and Senate leaders have said they would allow the plan to come up for a vote in a lame-duck session if it wins commission approval. Incoming Speaker John Boehner (R-Ohio), however, has not committed to a vote in the next Congress. 

The proposal offered on Wednesday would cut the deficit by $3.9 trillion by 2020 and reduce national debt as a percentage of GDP to 40 percent by 2035. Those are slightly deeper cuts than what the two chairmen proposed in a draft floated in November.

The chairmen made changes to their draft in order to try to win the votes of Democratic and Republican members, a source close to the discussions said.

To appeal to Democrats on the commission, the chairmen eliminated a provision that converted the federal share of Medicaid payments to a block grant. This would have prevented federal spending from increasing alongside rising Medicaid costs. 

The new proposal also does more to spur on the short-term economic recovery by proposing $22 billion less in domestic spending cuts in 2013. 

In a nod to Republicans, the chairmen proposed a temporary payroll tax holiday.

But the chairmen also retained a number of politically unpalatable provisions, including the proposed elimination of popular tax provisions like the mortgage interest tax break. They also kept a proposal to reduce Social Security benefits by gradually raising the retirement age to 68 by 2050 and to 69 by 2075. 

Conrad suggested members of the commission had little choice but to support the proposal, given the country’s deficit. 

“The nation is headed for a fiscal cliff. We have to act,” said Conrad, who is up for reelection in 2012. He said he didn’t know if voting for a plan that cuts Social Security would hurt his political future.

Gregg asked fellow panelists to vote in favor of the report to keep the debate alive. 

“There are no easy fixes here, so while I do not agree with all parts of the co-chairmen’s final proposal, I will support it because it represents a step forward that we urgently need,” Gregg said.

Sen. Tom Coburn (R-Okla.) indicated he also might vote yes to keep the debate alive, but echoed other Republican members of the commission in complaining that the plan does too little to rein in healthcare spending. Sen. Mike Crapo (R-Idaho) also said he was troubled by the plan’s lack of healthcare cuts, though he added he could vote yes.

House Republicans on the panel appeared to be preparing to vote en bloc against the plan, although a House aide said that Rep. Dave Camp (R-Mich.), the incoming chairman of the Ways and Means Committee, had not made up his mind Wednesday and favored some of the plan’s proposals. 

Incoming House Budget Committee Chairman Paul Ryan (R-Wis.) and Rep. Jeb Hensarling (R-Texas) strongly signaled they would vote against the plan because of the lack of healthcare cuts, though an aide to Ryan said he was not a definite “no” vote. 

Liberal Rep. Jan Schakowsky (D-Ill.) said she would be voting no because the plan makes too deep a cut to social spending.

In addition to Gregg and Conrad, David Cote of Honeywell; Ann Fudge, the former CEO of Young & Rubicam Brands; and Alice Rivlin of the Bipartisan Policy Center said they would vote yes. Bowles and Simpson are also yes votes.

Houses Budget Committee Chairman John Spratt (D-S.C.), who lost his reelection bid in November, said he is leaning toward supporting the proposal.

Rep. Xavier Becerra (Calif.), the assistant House Democratic leader, is undecided but suggested he could vote yes if the proposal is modified. Speaker Nancy Pelosi (D-Calif.) blasted the chairmen’s draft last month, calling its cuts to entitlement spending “simply unacceptable,” and Becerra has been expected to follow Pelosi’s lead in rejecting the largely similar final plan.

Senate Majority Whip Dick Durbin

 (D-Ill.) said he needed more time to study the proposal, but criticized the chairmen for overstating the degree to which a ban on earmarks would reduce the deficit. 

The Service Employees International Union blasted the plan as a job-killer in a Wednesday press release, suggesting the union’s former president and commission member Andrew Stern could vote against the proposal. 

Senate Finance Committee Chairman Max Baucus (D-Mont.) and Camp did not attend the meeting.