Pressure Builds on Deficit Panel to ‘Go Big,’ Beyond Its Mandate, in Cuts

Published: September 12, 2011 - New York Times

WASHINGTON — Led by President Obama, pressure is building on the new Congressional committee on deficit reduction to “go big” — beyond its mandate to shave as much as $1.5 trillion from budget shortfalls over 10 years — even as doubts remain about the panel’s ability to find enough bipartisan agreement to meet even the original goal.

A group of at least 57 prominent business executives and former government officials have signed a petition in support of a greater deficit reduction, which they are to release at a news conference on Monday. Among them are former treasury secretaries, budget directors and economic advisers to eight presidents from Richard M. Nixon to Mr. Obama; former Congressional leaders; and executives of top companies.

Their letter reflects a broad sense of urgency in both parties, and among economists and businesses, that the nation must put in place long-range measures to shrink future deficits. At current spending levels, those deficits are expected to balloon over the next decade as the population ages and as health care costs rise.

The letter does not call for short-term job-creation measures like the tax cuts and infrastructure spending Mr. Obama proposed last week, which would add to deficits initially. Even so, many of the signers, liberals and conservatives, have called for such steps.

The petition does include what has fast become a catchphrase for those who believe Congress is thinking too small. “We urge you to ‘go big,’ ” they wrote, “and develop a large-scale debt-reduction package sufficient to stabilize the debt as a share of the economy.”

Generally that level is estimated at $4 trillion in deficit reductions over the decade, savings that would build in later years. Because Congress and Mr. Obama already agreed last month to nearly $1 trillion in reductions in so-called discretionary spending for social and military programs, the special committee would have to find more than $3 trillion more to meet that goal — double its mandate for $1.2 trillion to $1.5 trillion, written into the August deficit-reduction deal.

Mr. Obama has called for a goal of at least $2 trillion, though the extra savings would mostly offset the up-front costs of his new $447 billion stimulus plan.

A higher deficit-reduction goal would increase pressure on both parties to address the two main drivers of projected high debt: the rapid growth of spending for the Medicare and Medicaid programs and an inefficient tax system unable to keep pace. That would test Republicans’ opposition to raising any tax revenues from high-income individuals and corporations, and would challenge Congressional Democrats to agree to more savings from entitlement programs than they would like.

Yet it is the parties’ differences on taxes and government health care benefits that have many in the White House, Congress and outside groups skeptical that the 12-member panel, which is split evenly between Republicans and Democrats and House and Senate members, can reach agreement even on the lesser goal.

Several signers of the letter said they had no illusions that their appeal alone would persuade many lawmakers, especially Republicans, to compromise. And while Congressional Democratic leaders have indicated that they would follow Mr. Obama in backing a compromise, many Democrats fear that doing so would undercut their ability to attack Republicans in 2012 for their proposals to remake and shrink Medicare and Medicaid.

The threshold of $4 trillion was first suggested in December by a majority of the fiscal panel that Mr. Obama established in 2010, led by Alan K. Simpson, a former Senate Republican leader, and Erskine B. Bowles, a former chief of staff to President Bill Clinton. Both men signed the letter.

“That is not a number that people just made up because the No. 4 bus just drove by,” Mr. Bowles said in an interview. “It’s the minimum amount we need to do in order to stabilize the debt and put it on a downward path as a percent of G.D.P.”

The public debt amounted to 62 percent of the nation’s gross domestic product last year and is projected to reach 77 percent of economic output by 2021.

Other signers include George P. Schultz, a former secretary of labor, treasury and state; Martin Feldstein and Murray L. Weidenbaum, top economic advisers to President Ronald Reagan; and the first chairman of Mr. Obama’s Council of Economic Advisers, Christina D. Romer.

The businesspeople include David M. Cote, the chairman of Honeywell International and a Republican on the Bowles-Simpson commission, and Marne Obernauer Jr., chairman of the Beverage Distributors Company and an owner of the Colorado Rockies baseball team.

The letter writers did not recommend how to reduce deficits, acknowledging that they had “differences of opinion.” But their letter, which was organized by the Committee for a Responsible Federal Budget at the New America Foundation, a centrist research group, makes clear that the solution should include spending and tax changes.

“We believe that a go-big approach that goes well beyond the $1.5 trillion deficit reduction goal” should include “major reforms of entitlement programs and the tax code,” they wrote.

Republican leaders have not joined Mr. Obama in seeking a higher goal. After a Rose Garden event on Monday, Mr. Obama will send Congress his jobs bill and long-term deficit cuts to offset its cost; next week he will propose another $1.5 trillion in deficit reductions to the committee.

“We’re certainly open to hearing the president’s ideas,” said Michael Steel, a spokesman for Speaker John A. Boehner.

The Senate Republican leader, Mitch McConnell of Kentucky, said last week: “I’m not going to prejudge what the joint committee might do. It has a broad array of options. But its goal, obviously, is to do something significant about deficit reduction with a floor of between $1.2 trillion and $1.5 trillion over 10 years.”

He added, “We’ll see whether they can even go beyond that.”

The committee is to report by Nov. 23, and Congress must hold an up-or-down vote by Dec. 23.

“Is it 50-50 that they’ll do something big and bold? No,” Mr. Bowles said. “But I think there’s a real chance. There are a lot of people on that committee, Republicans and Democrats, that I’ve talked to personally that want to do something big.”