Deficit panel unlikely to go big

The debt supercommittee is unlikely to “go big” and find more than $1.5 trillion in budget cuts, according to a member of the special panel. 

The key lawmaker, who spoke on condition of anonymity, said it is unrealistic to think the 12 lawmakers on the panel will be able to agree to a budget-cutting deal as large as $3 trillion or $4 trillion, as some have urged it to do. 

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The supercommittee has come under intense pressure to agree to a “grand bargain” styled deal similar in size to the recommendations of groups like President Obama’s debt commission, which called for $4 trillion in cuts over 10 years. 

Alan Simpson and Erskine Bowles, the co-chairmen of that panel, said this week that a similarly sized deal would help stabilize the nation’s debt and reassure markets and ratings agencies in the aftermath of S&P’s downgrade of the U.S. credit rating. 

The White House has hinted that Obama will propose deficit cuts next week that go well beyond the $1.5 trillion called for in the August deal to raise the federal debt ceiling; he already has said the supercommittee should come up with additional deficit cuts to pay for his $447 billion jobs bill. 

Some of the pressure on the panel is coming from its own members. 

“We need to ‘go big’ and reach savings of more than $1.5 trillion to address long-term deficits,” Sen. John Kerry (D-Mass.), a panel member, said Tuesday. “We need to ‘go long’ and address our long-term budget issues.”

But the supercommittee member who spoke on background cast doubt on the ability of the panel to be so ambitious.  There does not appear to be any consensus to cut Medicare payments to doctors, the Defense Department or other large programs with strong political support, the lawmaker said.

Sen. Jon Kyl (R-Ariz.), a member of the super-panel, last week threatened to quit if further Pentagon budget cuts were on the table. 

Other signs of the panel’s tough task include warnings from Democrats about touching entitlement benefits, and the GOP’s opposition to tax hikes. 

Rep. Jeb Hensarling (Texas), the Republican co-chairman of the supercommittee, said fulfilling the president’s request would put a substantial burden on the panel.

“By asking the Joint Select Committee to increase the $1.5 trillion target to cover the full cost of his plan, the president is essentially tasking a committee designed to reduce the deficit to pay for yet another round of stimulus,” Hensarling said last week. “This proposal would make the already arduous challenge of finding bipartisan agreement on deficit reduction nearly impossible.”

The 12 members of the supercommittee will meet for breakfast Thursday in hope of taking a few more steps on what some of them acknowledge will be a rocky path toward a deal.

Senate Republican leader Mitch McConnell (Ky.) said the committee’s deficit-reduction goal has a floor of between $1.2 trillion and $1.5 trillion over the next 10 years, but could find its biggest savings in the following decade.

“Some of the most significant things it could do would have the biggest effect beyond the 10-year budget window,” McConnell said last week.

Sen. Bob Corker (R-Tenn.) said he wants the supercommittee to find $3 trillion in savings.

“Dealing with our long-term issues is what will give confidence to business to go ahead and invest,” Corker said. “The best thing we can do for economic growth is really press this committee to go beyond their base mandate by reducing the deficit even more than requested, to move into the tax reform type of issues.”

Members of the Senate’s Gang of Six are pressing the supercommittee to advance a broad deficit-reduction package that includes significant tax reform, according to Senate sources. A large bipartisan group of senators has been invited to attend a press conference shortly after 12 p.m. Thursday to urge the supercommittee to surpass its budget target.

Gang of Six members Sens. Mark Warner (D-Va.) and Saxby Chambliss (R-Ga.) are organizing the effort, according to a GOP senator. The move is motivated by a strong desire to show bipartisan support for the supercommittee, not threaten it.  

Sen. Mary Landrieu (D-La.) said she plans to lend support, specifically to the call for broad tax reforms. 

“I think it should be a very high priority,” she said. “The tax code is almost wearing a big sign, ‘Come fix me’. So why don’t we get to work?”  

The lawmaker on the supercommittee said tax reform is a possibility but that it’s not likely to be as comprehensive as some lawmakers hope. The source, however, said some changes could be made to portions of the tax code affecting corporations and individuals.

The select panel has just over two months to produce a package, and reforming the tax code is considered a hugely complex issue.

At a public hearing hosted by the supercommittee on Tuesday, Congressional Budget Office Director Douglas Elmendorf testified that tax reform could reduce the deficit by spurring economic growth.

In response to a question from Sen. Pat Toomey (R-Pa.), Elmendorf said revenue-neutral reform that simplifies the tax code and lowers marginal rates would raise revenue for the government.

“The magnitude of that effect, of course, depends on the specifics of the policies that would be enacted,” Elmendorf said.

“A tax code with a broader base and lower rates would spur economic growth, but the magnitude is something we’d have to take specific proposals from you back to our models and work hard on for a while before we could hazard any sort of quantitative estimate,” he told Senate Finance Committee Chairman Max Baucus (D-Mont.) in answer to another question.

Russell Berman contributed to this report.