April 12 (Bloomberg) -- Senator Saxby Chambliss said the U.S. House’s 2012 budget proposal by fellow Republican Paul Ryan is “not going to work” because it relies too heavily on spending cuts and doesn’t raise tax revenue to help cut the deficit.
Chambliss, of Georgia, is co-leader of a bipartisan group of six senators crafting a debt-reduction plan that may redirect the budget debate as Congress faces fights over raising the federal debt limit and the fiscal 2012 budget.
“Are some people going to pay more in taxes? You bet,” Chambliss, of Georgia, said during a news conference in Atlanta yesterday after giving a speech to the Rotary Club.
At the same time, he called a proposal by Ryan, chairman of the House Budget Committee, to privatize Medicare “very intriguing.” In his speech to the Rotary group, Chambliss said the plan “could be the answer” to overhauling the federal health-care program for the elderly.
Ryan’s plan would phase out Medicare and instead provide retirees with subsidies to buy private health insurance.
The budget proposal released April 5 by Ryan, of Wisconsin, would cut the federal deficit in coming years by about three-quarters. It would reduce spending by $6 trillion over the next decade and lower top individual and corporate tax rates from 35 percent to 25 percent.
Chambliss said some tax exemptions will need to be eliminated to lower tax rates and increase revenue.
‘Gang of Six’
Chambliss, Virginia Democrat Mark Warner and their group’s other four senators aim to address financing of Medicare, Medicaid and Social Security. Chambliss said the so-called “Gang of Six” is “getting close to an agreement” on its proposal, though he didn’t offer details.
Warner, who joined Chambliss at the Rotary Club, said, “If we can start this with a bipartisan plan, it increases the chance of success.”
Chambliss said President Barack Obama’s plan announced by an aide on April 10 to give a speech tomorrow to propose changes in Medicare and Medicaid was a “curve ball” for his group.
“None of us knew until yesterday that the president was going to make any comment on the long-term deficit issue,” Chambliss said.
Obama speaks at George Washington University in the nation’s capital. The timing of his speech makes it unlikely the Gang of Six will finish and release its plan this week, said several congressional aides close to the discussions who spoke on condition of anonymity.
Jim Kessler, a vice president of the Democratic policy group Third Way in Washington, said Chambliss’s comments on taxes -- similar to the view among many Democrats that some tax increases will be needed to cut the deficit -- are important.
‘Slim to Possible’
“We’ve moved from slim to possible on a major deficit-reduction deal this Congress,” Kessler said.
The budget proposal Obama offered in February aims to reduce deficits by $1 trillion over coming years, though it didn’t offer proposals on Medicare, Medicaid or Social Security.
Democrats say Ryan’s plan would balance the budget on the backs of the nation’s seniors and poor while granting tax breaks to the wealthy.
Warner has said his group is using a report last year by leaders of the president’s bipartisan deficit reduction commission as a basis for discussions. The group’s co-chairmen were former President Bill Clinton’s chief of staff Erskine Bowles and Republican former Wyoming Senator Alan Simpson.
Once Obama provides his ideas in his speech, the debate among Republicans, Democrats and outside interest groups on restructuring the government’s finances will begin in earnest, said Simpson.
‘Shear the Sheep’
“The savagery hasn’t even started,” he said in a phone interview yesterday. “When they see it getting closer and closer,” interest groups “will come out of the woodwork and shear the sheep,” Simpson said.
Kessler said Obama’s speech offers “a great opportunity for him” to try to win back some of the momentum Republicans gained in negotiating a short-term budget deal that led to an April 8 agreement to cut about $38 billion in government spending.
At the same time, Kessler said, “there’s a lot of his progressive base that’s not going to be happy.”
To contact the reporter on this story: Heidi Przybyla in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Mark Silva at email@example.com