Thursday, April 21, 2011

Obama Raises Prospect of Social Security Hike as Deficit Panel Grows

By Jonathan Nicholson

The list of members of a panel to be headed by Vice President Biden to tackle the government's long-term deficit was rounded out further April 19 by the appointment of members of the Republican leadership in the House and Senate.

Separately, President Obama, appearing at a community college in Virginia, said raising the maximum earnings level to which Social Security taxes apply was one “example” of a change that could be made to shore up that program.

In separate statements, Senate Republican Leader Mitch McConnell (R-Ky.) and House Speaker John Boehner (R-Ohio) named Sen. Jon Kyl (R-Ariz.), the GOP whip, and House Majority Leader Eric Cantor (R-Va.) to the Biden panel. With the previous naming of other panel members by Democratic leaders, the congressional roster appeared set for the panel's initial meeting planned for May 5.

In his statement naming Cantor, Boehner repeated GOP skepticism on the process, which the White House has said is to create “a legislative framework for comprehensive deficit reduction.”

“With a crisis of this magnitude, commissions are simply no substitute for action. That's why the House has already passed a responsible budget that cuts spending and preserves critical health and retirement programs for America's seniors. The President, on the other hand, utterly ignored the recommendations of his last deficit commission and submitted a budget that would add more than $9 trillion to the debt and raise taxes on job creators,” Boehner said.

McConnell, in his statement, said, “A serious and credible path forward to reduce spending is the only thing, in my judgment, that will get Republican votes in the Senate to raise the debt ceiling. Partisan speeches and promises of some future cuts after the President leaves office simply won't suffice.”

Panel Target Is End of June

The White House said late April 18 the first meeting of the Biden group would take place at Blair House, across the street from the White House. No further details were disclosed.

Other members will include Sen. Daniel Inouye (D-Hawaii), chairman of the Senate Appropriations Committee; Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee; Rep. Jim Clyburn (D-S.C.), the assistant Democratic leader in the House; and Rep. Chris Van Hollen (D-Md.), the ranking member of the House Budget Committee. Inouye and Baucus were named by Senate Majority Leader Harry Reid (D-Nev.) April 14, while Clyburn and Van Hollen were named April 17 by House Democratic Leader Nancy Pelosi (D-Calif.).

It is unclear how the panel will proceed, though in his April 13 speech outlining new proposals to cut the deficit over the next dozen years, President Obama said Biden would hold regular meetings with the panel with the aim of “reaching a final agreement on a plan to reduce the deficit and get it done by the end of June”.

That timetable would put the conclusion of talks before the July 8 date that the Treasury Department has said is the deadline by which—even with using accounting changes to stretch the limit—the congressionally set ceiling on federal debt would be reached. Republicans insist no debt limit increase will be approved by them unless the White House and Democrats yield to as-yet unspecified spending cuts and budget controls. Among the early leading contenders for potential GOP demands are votes on balanced budget amendments to the U.S. Constitution and the imposition of statutory caps of some sort on federal spending.

‘Modest Changes' Could Help Social Security

House Republicans in the fiscal year 2012 budget resolution (H. Con. Res. 34) adopted by the House April 15 proposed substantial cuts in spending, as well as overhauls of federal health programs like Medicare and Medicaid and extending all of the 2001 and 2003 tax cuts. That plan would shave about $1.649 trillion over 10 years from current law, according to the Congressional Budget Office.

Obama's original budget for 2012 sent to Congress in February was actually scored as increasing the 10-year deficit by more than $2 trillion. But in proposals put forward April 13, Obama instead aimed to reach a deficit reduction target similar in size to Ryan's plan. Unlike Ryan's plan, though, Obama said his would be more “balanced” between spending cuts and new revenues and would be over 12 years instead of 10. The anti-deficit Peter G. Peterson Foundation estimates the Obama plan would trim less than $1.35 trillion from the deficit over its first 10 years.

“So the question is, how do we achieve the same goal? Can we do it in a more balanced way? And the House Republican budget that they put forward, they didn't just not ask the wealthy to pay more; they actually cut their taxes further,” Obama said at an appearance at the Northern Virginia Community College, the first of three planned “town hall”-style meetings in the April 18 week to tout his proposals.

The complete text of this article can be found in the BNA Daily Tax Report, April 20, 2011.

© 2011, The Bureau of National Affairs, Inc.

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