Walker Says Major Debt-Cutting Deal Up to a Year Away
Former U.S. Comptroller General David Walker said the White House and Congress are likely to agree to delay across-the-board spending cuts and tax increases set for January, putting off a major budget accord by as much as a year.
Congressional committees haven’t “done their work” on realistic plans to overhaul taxes and entitlement programs such as Medicare, and President Barack Obama’s administration has done little to prepare the public for spending cuts and tax increases, Walker said at a luncheon today in New York sponsored by the Economic Club of New York and Bloomberg News.
“Realistically, the tough decisions are not going to be made until 2013,” he said. “The American people haven’t been engaged adequately.”
Congressional leaders have said they probably will wait until after the Nov. 6 election to address the George W. Bush- era tax cuts set to expire Dec. 31 and $1.2 trillion in automatic spending cuts set to begin taking effect in January.
There is no sign of an agreement to avoid the so-called fiscal cliff. The Congressional Budget Office has said the economy will probably tip into recession if Congress doesn’t resolve the impasse by early next year.
Walker said he’s skeptical there will be movement toward a resolution at the end of this year when Congress meets after the election.
“There’s a reason it’s called a lame-duck session,” Walker said. Congress and the president are instead likely to put the spending cuts and tax increases on hold, he said. “They’re going to delay the implementation of that from nine months to a year with a plan to do a grand bargain” including budget controls and a tax overhaul, he said.
Walker also called on Republican lawmakers to give up their pledge not to increase taxes, and Democrats to be willing to revise Social Security and Medicare. Grover Norquist, president of Americans for Tax Reform, is the architect of an anti-tax- increase pledge that all but six House Republicans and seven Senate Republicans have signed.
“Those that take pledges that say ‘I won’t raise taxes’ or ‘I won’t renegotiate the Social Security or Medicare promises,’ I’m here to tell you, they’re part of the problem, they’re not part of the solution,” said Walker. “People who are of means and of influence need to start putting pressure on these people to rescind these pledges, rescind them.”
Walker served as U.S. comptroller general from 1998 to 2008 under Democratic President Bill Clinton and Republican President George W. Bush. Now he leads the Comeback America Initiative, an independent, non-profit fiscal policy organization.
The Obama administration plans this week to send Congress a report spelling out how it would carry out billions of dollars in automatic spending cuts starting in January.
Congress agreed to the spending cuts as part of last year’s Budget Control Act in an attempt to require lawmakers to work out an agreement this year to replace it.
The cuts would amount to $109 billion next year, coming equally out of defense and non-defense spending. Democrats are insisting that Republicans accept some tax increases in exchange for altering the defense cuts, while Republicans have refused.
The nation may face a debt crisis if lawmakers don’t make meaningful progress in 2013 on a major accord that includes spending cuts and revenue increases, Walker said. “Nobody is going to be able to hide,” he said.
“They rose up to meet those challenges and now they’re in much better shape than we are,” he said. “If they did it, we can do it.”
To contact the reporter on this story: Heidi Przybyla in Washington at email@example.com
To contact the editor responsible for this story: Jodi Schneider at Jschneider50@bloomberg.net