Experts Plan Tour To Tout Deficit Measures

Published Sep 8, 2010. By Humberto Sanchez.

Five prominent budget experts said today they will tour at last six cities to discuss with the public ways to reduce the budget deficit, even though they doubt Congress will act on the issue before the end of the year.

"We are facing a ticking time bomb," said David Walker, former U.S. comptroller general and president and chief executive officer of The Peter G. Peterson Foundation, which is sponsoring the tour with the Concord Coalition.

The CBO projected Tuesday that the deficit will exceed $1.3 trillion for FY10, or about 9.1 percent of the gross domestic product. That approaches the FY09 level of 9.9 percent of GDP, the largest as a share of GDP since the end of World War II.

The tour comes as the presidential deficit commission is set to send Congress a package of proposals on Dec. 1, while a deficit commission established by the Bipartisan Policy Center is scheduled to unveil a package in mid-November.

"The commissions will report specific solutions, and our hope is to help lay the framework for consideration of the types of the solution the commissions will recommend," said Concord Coalition Executive Director Robert Bixby.

The group believes the public will be more accepting of the solutions after being informed and consulted about them. The proposed fixes are likely to include controversial tax increases and cuts to popular programs.

"Nothing is going change without public demand, without public understanding," said Bill Novelli, a Georgetown University professor and former chief executive of AARP.

The experts said they believe the Republicans and Democrats on the president's fiscal commission are unlikely to find enough common ground to get 14 of its 18 members to agree to a single package to present to Congress, as required under its charter. But they said they hope whatever package that finally emerges will be a precursor for action in 2011.

Walker and Bixby also said they think that next year would be a good time to address Social Security. The program is not in trouble now but is projected to run out of funds to pay for the current regime of benefits. Once the program is put on a firmer financial footing, momentum to take on more difficult fiscal issues will grow, according to members of the group.

The group also commented on proposals to help boost the economy put forth by President Obama this week, including allowing businesses quickly write off 100 percent of their spending on new plants and equipment through 2011; making permanent a tax break for research and development; and calling on Congress to provide $50 billion to rebuild roads, railways and airports.

American Action Forum President Douglas Holtz-Eakin, a former CBO director and campaign adviser to Sen. John McCain, R-Ariz., said he thinks the expensing proposal is a good idea. But he was less enthusiastic about the R&D tax credit, and he criticized the infrastructure proposal on grounds it would not help the economy in the short-term.

He added he was concerned the White House had not identified how to pay for the three proposals, which is expected to cost about $350 billion over 10 years.

Isabel Sawhill, senior fellow of Economic Studies at the Brookings Institution and former OMB associate director, said that the proposals appeared to her as a desperate attempt to do something for the economy in the short-term by picking things that are favored by Republicans.

But it is unclear if the proposals will be enacted this year. Bixby said that if the tax credit and expensing proposal were attached to the infrastructure funds, "it would give Republicans a reason to oppose" the tax proposals.