The two chairmen of a special commission President Obama appointed to find ways to balance the federal budget said it could require raising the retirement age, slashing cost-of-living adjustments to Social Security recipients and canceling popular tax breaks like the mortgage interest deduction.
The 18-member panel has yet to sign off on the plan by Erskine Bowles, former chief of staff to President Clinton, and Alan Simpson, former Republican senator from Wyoming.
But the blueprint, aimed at trimming $3.8 billion from the federal deficit over 10 years, provides a dramatic preview of the bold moves under discussion and politically painful decisions that would have to be made to bring federal spending under control.
The full panel is expected to deliver formal recommendations to Obama next month, and White House deputy press secretary Bill Burton said the president views the chairmen’s proposals as a first step in that process.
“He respects the challenging task that the co-chairs and the commissioners are undertaking and wants to give them space to work on it,” Burton said. “These ideas, however, are only a step in the process towards coming up with a set of recommendations, and the president looks forward to reviewing their final product.”
The Bowles-Simpson plan would balance the federal budget by 2037 by slashing federal spending and outlays for Social Security and Medicare. It would adjust income tax rates and reduce Social Security benefits for the wealthy.
The plan would raise the retirement age from 67 to 68 by 2050, abolish the Alternative Minimum Tax and cut $200 billion from the federal budget, including the defense budget. It would also cut Medicare spending by reducing payments to doctors.
The far-ranging plan was welcomed by some deficit hawks, but faces uncertain prospects in the White House and Congress.
“This is truly a most encouraging sign,” said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, which has no direct affiliation with the White House commission. “If this co-chair plan is meant to be the starting point, I’d say it would be a pretty terrific ending point.”
The program would eliminate earmarks in the federal budget and cut 10 percent of the federal work force. Many federal workers would see a salary freeze, and both White House and congressional spending would be reduced.
Obama in February created the National Commission on Fiscal Responsibility and Reform by executive order. The panel, appointed by the president and congressional leaders, is charged with reducing the deficit and restoring fiscal health to the federal budget.
While dramatic, the plan is far from ironclad and faces numerous hurdles before any of it can be implemented. In order to proceed, the final plan must get the support of 14 of the commission’s 18 members.
And lawmakers, despite their energized campaign rhetoric about slashing federal spending and dealing with entitlements, also may balk — especially on any plan that cuts Social Security.
“There are always policy choices when you get into entitlement cuts,” said Jonathan Breul, a former White House budget officer and executive director of the IBM Center for the Business of Government.
