Deficit Panel Sparks Stalemate Concern Over Partisan ‘Land Mines’ on Taxes

House minority leader Nancy Pelosi named three Democrats to the special committee charged with finding $1.5 trillion in budget savings: Representatives James Clyburn of South Carolina, Chris Van Hollen of Maryland and Xavier Becerra of California.

The committee “has a golden opportunity to take its discussions to the higher ground of America’s greatness and its values,” Pelosi, a California Democrat, said in a statement.

The lineup is now complete for the committee created in the Aug. 2 law that raised the nation’s debt limit and averted a default. The three House Democrats will work with Republican Representatives Dave Camp, Fred Upton and Jeb Hensarling. The Senate team includes Republicans Jon Kyl, Pat Toomey and Rob Portman and Democrats Patty Murray, John Kerry and Max Baucus.

Doubts are already being raised about the group’s prospects for reaching a bipartisan compromise on the national debt before next year’s elections. The choices from both parties include some “land mines,” said Robert Bixby, head of the Concord Coalition, an Arlington, Virginia-based group that advocates for a balanced budget.

‘Alarm Bells’

Murray, of Washington state, will cause “certain alarm bells to go off” because she is in charge of her party’s principal fundraising committee for senators seeking re- election, Bixby said. Toomey, of Pennsylvania, and Hensarling, of Texas, are vocal anti-tax advocates, and all six Republican appointees have signed a pledge against voting to raise taxes. Upton’s panel has taken the lead on investigating President Barack Obama’s agenda, including the health-care law.

“This is not auspicious for a grand bargain,” Bixby said.

Murray and Hensarling will be co-leaders of the committee.

The American public is discouraged about the prospects government can fix the nation’s economic problems, according to a new Washington Post poll. Almost three-fourths of those responding said they have little or no confidence in the nation’s leaders to repair the economy and almost eight in 10 say they are dissatisfied with the way the political system is working, the Post poll shows.

The panel’s work has taken on greater urgency since Standard & Poor’s on Aug. 5 lowered the U.S.’s AAA credit rating for the first time, saying lawmakers weren’t doing enough to reduce record deficits by raising taxes or cutting spending. The so-called super committee will be the central focus of political and lobbying activity in Washington for the next four months, as industries try to protect their interests.

Mounting Debt

Unless the panel pushes through a deficit-reduction package by year’s end, $1.2 trillion in automatic, across-the-board spending cuts will be triggered over a decade, starting in 2013, equally targeting defense and non-defense programs. The 12 panel members need a simple majority to make a recommendation.

Part of the House Democratic leadership, Van Hollen, 52, has fought to preserve government spending programs such as Medicare. He is close to Pelosi and ran the party’s fundraising arm for U.S. representatives for four years, helping expand the Democratic majority in 2008.

Lawyers and law firms, often including lobbyists, have been the biggest bloc of donors to Van Hollen during his career, according to Washington’s Center for Responsive Politics, which tracks campaign-finance data. Retired people and those involved in real estate come next.

Social Security

Becerra, 53, vice chairman of the House Democratic Caucus, has worked to preserve spending for Social Security and Medicare, the health program for the elderly. He’s opposed efforts to preserve tax cuts for the wealthiest Americans.

Residents of Becerra’s Los Angeles district make less money and have less education than the average in California, according to Bloomberg Government data. The biggest employment areas for the district, which is 70 percent Hispanic, are finance, retail and wholesale.

Clyburn, another Democratic leader, has also made a point of the need to preserve spending for the elderly and poor.

“Throughout the deliberations on this debt crisis, my bottom line has been to protect Social Security, Medicare and Medicaid,” he said in prepared remarks in July.

All three senators named by Senate Majority Leader Harry Reid have said revenue increases should be part of a debt plan. Republican leaders reject that, saying the group should look only at spending cuts.

Three of the appointees who served on a fiscal commission that Obama set up last year -- Baucus, Camp and Hensarling -- voted against that panel’s bipartisan plan to rewrite the tax code and trim entitlement benefits.

“I’m discouraged,” said Bill Hoagland, a budget adviser to Republican congressional leaders from 1982 to 2007. “This is going to be an uphill battle to find a majority out of this group.”

Bixby and Hoagland identified Portman, of Ohio, who served as budget director for President George W. Bush, as a potential dealmaker willing to work across the political aisle.

To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.net Kristin Jensen in Washington at kjensen@bloomberg.net

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

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