Five Members of Debt Panel Oppose Bowles-Simpson Plan, Enough to Reject It

Five members of President Barack Obama’s debt commission said they oppose its $3.8 trillion budget-cutting proposal, enough to ensure rejection of the plan.

Senate Finance Committee Chairman Max Baucus, a Democrat, incoming House Ways and Means Committee Chairman Dave Camp, a Republican, said they will vote against the plan tomorrow. Andy Stern, former president of the Service Employees International Union, also will vote no, said spokeswoman Christine Bonanno. Earlier, Representatives Paul Ryan, a Wisconsin Republican, and Jan Schakowsky, an Illinois Democrat, said they were opposed.

The plan requires approval from 14 of the panel’s 18 members to forward it to Congress, meaning five “no” votes would kill it.

Panel co-chairmen Erskine Bowles and Alan Simpson yesterday unveiled the revised plan to overhaul the budget in part by raising taxes by $1 trillion and scaling back or eliminating hundreds of tax deductions, exclusions and credits such as those letting homeowners write off interest on their mortgage payments.

The recommendations are “wrong for Montana and wrong for rural communities across the country,” Baucus of Montana said in a statement. While reducing the deficit is “imperative,” he said, “we cannot cut the deficit at the expense of veterans, seniors, ranchers, farmers and hard-working families.”

Coburn, Crapo

Earlier today, Republican Senators Tom Coburn of Oklahoma and Mike Crapo of Idaho said that while they didn’t like many elements of the plan, they would support it because they said the nation’s fiscal challenges must be addressed. That raised the number of commission members supporting the plan to nine.

“I would have written a totally different plan,” Coburn told reporters, while adding that the U.S. needs to “get out of this hole.”

Camp of Michigan said the proposal “fails to address the increased health-care spending that would result from the new health-care law.” He also said he opposed provisions that would raise taxes.

Baucus said a proposal to increase the gas tax “would hurt folks in rural states like Montana where we often have to travel long distances.” He cited cuts to farm subsidies along with Social Security and Medicare and said they would disproportionately hurt rural states with large numbers of older residents.

Cutting Taxes

The Bowles-Simpson approach would cut individual and corporate income taxes, reduce spending on Medicare by more than $400 billion and trim Social Security benefits. It calls for $1.6 trillion in reductions to so-called discretionary spending by the government, about evenly divided between security and non-security related programs.

The package would reduce the annual federal deficit from $1.3 trillion this year to about $400 billion by 2015 and start reducing the $13.7 trillion national debt.

Other proposal backers are by Senator Judd Gregg, a New Hampshire Republican; Senator Kent Conrad, a North Dakota Democrat; David Cote, chairman of Honeywell International Inc.; Ann Fudge, former chief executive officer of Young & Rubicam Inc.; former Congressional Budget Office Director Alice Rivlin, along with Bowles, a former chief of staff to President Bill Clinton, and Simpson, a former Republican senator from Wyoming.

Ryan said today he would oppose the plan because it doesn’t go far enough in repealing the health-care overhaul approved earlier this year, which he said would only worsen the government’s fiscal woes.

“You cannot fix this problem without taking on health care,” Ryan said. The plan “doesn’t even take a step in the right direction. It takes many steps in the wrong direction from my perspective.”

Schakowsky said the plan included too many cuts, including ones that would come at the expense of Social Security and Medicare beneficiaries.

To contact the reporters on this story: Brian Faler in Washington at bfaler@bloomberg.net; Heidi Przybyla in Washington at hprzybyla@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.

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