Bowles of U.S. Debt Commission Putting Focus on Government Spending Cuts
As much as three-quarters of the savings President Barack Obama’s national debt commission has been asked to propose ought to come from cuts to government spending rather than tax increases, panel co-chairman Erskine Bowles said.
Bowles, a White House chief of staff under former President Bill Clinton, said yesterday that trims to expenditures could account for two-thirds to three-quarters of the panel’s package of proposals for reducing the federal budget deficit.
“You’ll find some people who think that’s crazy and some think that’s good or not enough -- people are on all sides of the issue,” Bowles said after the panel’s monthly public meeting, its last before Congress leaves for an August recess.
He said the panel won’t begin to make “real decisions” on what to recommend until September. “Nothing’s decided until everything is decided,” he said.
Obama created the panel in February to scour the government’s budget in search of enough savings to reduce the deficit to 3 percent of the economy by 2015, from the current 10 percent. That will require finding $250 billion in savings in 2015 alone, more than what Obama’s health-care overhaul is projected to save over an entire decade.
The panel’s completed report, due after the November midterm elections, would have to be approved by 14 of its 18 members to be forwarded to Congress for consideration.
Its work has come under fire from some advocacy groups. The AFL-CIO, NAACP, National Education Association, Moveon.org and others are conducting a joint news conference today in Washington to caution the panel not to suggest cuts to the Social Security program.
The panel has created a trio of working groups to develop recommendations on taxes, federal programs with mandatory spending -- such as Social Security -- and the discretionary portion of the budget that must be approved each year by Congress. The groups are to come up with a menu of savings options worth $125 billion each in 2015 from which the commission could develop its recommendations, Bowles said.
The panel is unlikely to adopt all of those proposed cuts, he said.
“If you add up all of our goals it adds up to more than what we have to get to -- we’re trying to push ourselves,” he said.
The working group heads didn’t provide details today on what sort of changes they may recommend.
Bowles said the panel is focusing “a lot” of its tax work on tax expenditures, which are deductions, exemptions and other breaks used in lieu of direct spending programs. The costs of such expenditures totaled $1 trillion last year, including those that allow homeowners to write off mortgage interest payments and subsidize television and film production.
Critics say the breaks add to the deficit by draining revenue from the Treasury, make the tax code needlessly complex and are seldom reviewed to assess how well they work. Harvard University Economist Martin Feldstein said in a Wall Street Journal column last week that reducing such expenditures would be the single best way to cut the deficit.
Bowles expressed optimism the panel would be able to agree on a plan, saying, “I can tell you we’re making progress.”
He also said “some people say it’s a miracle that we can have Republicans and Democrats meeting together with real comity for three months and we’re still in the same room, we’re talking to each other and nobody’s really angry.”
The commission’s other co-chairman is former Senator Alan Simpson, a Wyoming Republican. Its other members include U.S. lawmakers from both parties.
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.