Murray, Baucus, Kerry to Sit on Deficit-Cutting Super Committee

Senate Democratic Leader Harry Reid will appoint Senators Patty Murray of Washington, Max Baucus of Montana and John Kerry of Massachusetts to a special committee charged with finding $1.5 trillion in budget savings.

Reid, of Nevada, said he will name Murray as co-chairwoman of the bipartisan, 12-member deficit- cutting panel, which will be the central focus of political and lobbying activity on Capitol Hill for the next four months.

“As the events of the past week have made clear, the world is watching the work of this committee,” the Senate majority leader said last night in a statement.

Standard & Poor’s on Aug. 5 lowered the U.S.’s AAA credit rating for the first time, slamming lawmakers for failing to cut spending or raise revenue to reduce record deficits.

Reid’s selections to the so-called super committee may send mixed signals about whether it is headed for deadlock or a debt- curbing compromise. While Kerry has a record of working with such Republicans as Arizona Senator John McCain, Murray will lead Democrats’ Senate re-election efforts, a role that some analysts say raises doubts about her ability to leave politics aside.

Each chamber will name six members to the panel. Senate Republican leader Mitch McConnell will announce his choices today, said an aide familiar with the matter, leaving House Republican and Democratic leaders to make their appointments.

Automatic Cuts Loom

The committee was conceived as part of a law signed on Aug. 2 by President Barack Obama that raised the U.S. debt limit to avoid a default. The panel must push through a deficit-reduction package by year’s end or else $1.2 trillion in automatic spending cuts will be triggered over the next decade.

All three senators appointed by Reid have said they believe that revenue increases, either by closing loopholes or boosting tax rates on the rich, should be part of a debt plan. Republican leaders have rejected that idea, saying the focus should entirely be on spending reductions.

“This puts even more pressure on where Obama is,” because it may force him to lay out his own deficit-cutting plan, said Ed Lorenzen, a former senior aide on a fiscal commission the president set up last year.

Murray, the fourth-ranking member of her party in the Senate, and Baucus are unlikely to make any compromise not supported by the president, Lorenzen said, while Kerry may emerge as a dealmaker willing to press both sides to make uncomfortable tradeoffs.

Baucus is chairman of the Senate Finance Committee, while Kerry heads the Foreign Relations Committee.

‘Alarm Bells’

Murray’s appointment will cause “certain alarm bells to go off” because she heads the Democratic Senatorial Campaign Committee, said Robert Bixby, head of the Concord Coalition, an Arlington, Virginia-based group that presses for balanced budgets. “She’s the head of the Democratic election effort, and that sends a bad signal right off the bat.”

Kerry is a “smart pick, a lot of prestige and willing to work across the aisle,” Bixby said.

Murray’s appointment satisfies calls by female Democratic senators such as Jeanne Shaheen of New Hampshire, who had pressed Reid to name a woman to the panel after previous negotiating groups, including one led by Vice President Joe Biden, included only male lawmakers.

The three senators stressed their commitment to reaching an agreement, in a statement: “The true danger lies in inaction,” they said. “These are among the most serious challenges we’ve ever faced in the Senate.”

Kyl, Portman

Among the leading Senate Republican contenders for the panel are Jon Kyl, the No. 2 Republican from Arizona, and Rob Portman of Ohio, who was President George W. Bush’s top international trade official and budget director, according to aides familiar with the deliberations. Potential picks among House Republicans are Ways and Means Committee Chairman Dave Camp of Michigan and Paul Ryan of Wisconsin, the Budget Committee chairman.

Reid, with his appointments, rejected calls by Alan Simpson, a former Wyoming Republican senator who was co-chairman of Obama’s debt commission, to appoint members of the “Gang of Six” senators, a separate group that proposed a combination of spending cuts and revenue increases to bring down the deficit.

Among the Gang of Six members passed over is Senator Dick Durbin, the Senate’s No. 2 ranking Democrat who also served on Obama’s fiscal commission last year and had expressed support for raising the retirement age for Social Security.

Party Loyalist

Baucus is a party loyalist who is close to Reid and has a history of fighting to protect Social Security and opposing Bush’s tax cuts for upper-income Americans. He was the only Democratic senator to vote against the final report produced by the president’s fiscal commission, with Durbin and Senator Kent Conrad of North Dakota supporting it.

He said on July 31 that any plan “has got to be evenhanded; it’s got to be balanced.”

“That means some of the most wealthy Americans who have money hidden overseas have to pony up,” he said in a video posted on his website. “It means that billionaires in this country who have not been participating have to participate.”

Securities firms and investors have been Baucus’s top campaign contributors since 2007, donating a total of $722,669, according to the Center for Responsive Politics, a Washington- based research groups that tracks money in politics.

Crossing the Aisle

Still, Baucus has tried to cross the aisle before, spending months negotiating with Republican lawmakers in 2009 on the health-care overhaul. In 2003, he and former Senator John Breaux of Louisiana were the only two Democrats invited by Republican leaders to take part in closed-door negotiations between the House and Senate on a bill creating a prescription-drug benefit in the Medicare health insurance program.

Murray has also voiced support for making wealthier Americans play a significant part in reducing the debt.

“I strongly believe that everyone must sacrifice, not just middle-class families who have been sacrificing over and over,” she said in a statement on Aug. 1. She said the special committee “will be so important in building a balanced approach to addressing our long-term debt and deficit.”

Murray’s biggest campaign supporter was Emily’s List, a group that works to elect women who favor abortion rights, with $202,656 in contributions since 2007, according to the Center for Responsive Politics. She also got support from retirees, who have contributed $795,738 to help re-elect her since 2007. Many of the deficit-reduction proposals floated by Republicans have included cuts to Medicare and Social Security.

Microsoft, Boeing

Among Murray’s top five campaign contributors were the employees of Microsoft Corp. (MSFT), Boeing Co. (BA) and Weyerhaeuser Co. (WY)

Kerry, at an Aug. 4 press conference, made it clear he intends to seek budget savings from closing tax loopholes.

“Surely in 73,000 pages of various loopholes and tax benefits we can find some that are no longer as important or as beneficial as they once were,” he said. He pointed to subsidies for mohair and for oil companies.

Kerry’s biggest supporters have come from the financial and legal professions. Employees of Bain Capital LLC, the private equity firm founded by presidential hopeful Mitt Romney, were his biggest source of campaign cash since 2007, with donations totaling $76,200, according to the Center for Responsive Politics.

Open to Loopholes

Kerry in the past has opposed a proposal to close a tax loophole enjoyed by private equity firms that allow their executives to pay taxes at a 15 percent capital gains rate rather than at the top 35 percent income tax rate.

The panel’s deliberations may be played out in public. Both House Speaker John Boehner and House Democratic leader Nancy Pelosi have called for the discussions to be open.

During a conference call with House Republicans, Boehner told colleagues that he and other congressional leaders want the super committee to conduct open hearings and a public process for making its recommendations, according to a leadership aide who spoke on condition of anonymity.

Pelosi, in an Aug. 5 statement, said the panel’s “deliberations should be open” to the public and media coverage.

To contact the reporter on this story: 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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