Debt reduction proposal angers left, gets noncommittal White House response

A plan to cut the federal deficit and reduce the debt that was released Wednesday by the co-chairs of President Obama’s debt commission was blasted by the left, with labor unions leading the way in decrying its cuts, and received only a noncommittal response from the White House.

The draft proposal, which is not the final set of recommendations from the commission and has not been voted on by its 18 members, also drew fire from tax groups on the right.

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Framed as a “starting point” for the commission’s final report to be issued in December, the plan recommended a broad and deep set of spending cuts, angering liberals who see the government’s problem as a lack of revenue, and not out of control spending.

“The chairmen of the Deficit Commission just told working Americans to ‘Drop Dead,’” said Richard Trumka, president of the AFL-CIO, referring to proposed changes in how Social Security is administered. “Some people are saying this is plan is just a ‘starting point.’ Let me be clear, it is not.”

House Speaker Nancy Pelosi, California Democrat, called the proposal “simply unacceptable.”

The White House itself did not praise or criticize the plan, released by deficit commission co-chairs Erskine Bowles, former White House chief of staff to President Bill Clinton, and Alan Simpson, a former Republican senator from Wyoming.

“The President will wait until the bipartisan fiscal commission finishes its work before commenting,” said White House deputy press secretary Bill Burton.

Obama, said Burton, “respects the challenging task that the Co-Chairs and the Commissioners are undertaking and wants to give them space to work on it.”

“These ideas, however, are only a step in the process towards coming up with a set of recommendations and the President looks forward to reviewing their final product early next month,” Burton said.

Even if the commission settles upon a final plan that gets approval from 14 or more members, its report will not be binding on Congress. So the recommendations are only a baseline for possible legislation.

The plan makes changes to Social Security: a move toward greater indexing for income, a raising of the retirement age to 68 by 2050, and a “more accurate” annual cost of living adjustment for payments, which would rein in the size of the increases.

As part of $200 billion in “illustrative” spending cuts, there are also proposed 15 percent cuts to the budgets for the White House and for Congress, the elimination of all earmarks by members of Congress, and a three-year pay freeze for all non-defense federal employees.

And there is a recommendation to overhaul and simplify the tax code, focusing on moving to three brackets, a lowering of the corporate tax rate, and the elimination of tax exemptions and loopholes, except for perhaps the child tax credit.

The proposal lays out three possible tax reform plans, one of them based on a bipartisan proposal from Sen. Ron Wyden, Oregon Democrat, and Sen. Judd Gregg, New Hampshire Republican.

The plan would raise the gas tax by 15 cents, phasing in the hike over a few years, to pay for transportation projects.

Liberal think tanks pushed the White House to move the deficit commission in a different direction or to condemn it.

“It’s time for the Obama administration to become more engaged in the bipartisan commission it established, or to make it clear that the commission does not represent their viewpoint on these issues,” said John Irons, research and policy director at the Economic Policy Institute, a labor-backed group.

Irons, with EPI, criticized the plan for proposing a 10 percent cut in government jobs over the next ten years, cutting funding for national parks, airports, the Smithsonian, and the Corporation for Public Broadcasting.