Obama panel won't rule out higher taxes to reduce deficit

WASHINGTON — The Democratic co-chairman of the bipartisan debt-reduction commission that President Barack Obama created on Thursday said that "everything is on the table" — including raising taxes and cutting Medicare and Social Security — but declined to discuss his preferences or predict what proposals will prevail.

"Everything is everything," Erskine Bowles told McClatchy. "I don't think you're going to be able to get there if you take anything off the table. We've got to look at good ideas, bad ideas and think about all of them."

Bowles, 64, is a former White House chief of staff under President Bill Clinton and currently the president of the University of North Carolina.

Obama also used the phrase "everything is on the table" as he signed an executive order Thursday to create the National Commission on Fiscal Responsibility and Reform. The 18-member commission is to make non-binding recommendations to Congress by Dec. 1, after November's midterm elections, on how to balance the federal budget — excluding interest on the national debt — by 2015.

The current pace of national debt risks national financial calamity over the coming decade, economists warn. America's already dependent on loans from China and other countries to finance it. The federal budget deficit is expected to reach $1.56 trillion this year.

In addition, Medicare insolvency is projected in seven years. By 2015, the national debt is expected to near $14 trillion, or 72.9 percent of the GDP — enough to threaten future economic growth and erode U.S. living standards.

Republican congressional leaders reacted warily to Obama's commission, even as they prepared to appoint representatives to it, predicting that its Democratic majority would try to use it to raise taxes.

"Americans know our problem is not that we tax too little, but that Washington spends too much — that should be the focus of this commission," said Senate Minority Leader Mitch McConnell, R-Ky., in a statement.

Ten of the commission's 18 members are expected to be Democrats, but at least 14 members must approve the final report for it to be forwarded to Congress.

The debt-reduction commission's Republican co-chairman will be retired Sen. Alan Simpson, a Wyoming Republican. Obama described Simpson, 78, as "a flinty Wyoming truth-teller," adding, "If you look in the dictionary it says 'flinty,' and then it's got Simpson's picture."

Grover Norquist, the president of Americans for Tax Reform, an anti-tax group, said that, as a senator, Simpson twice helped broker major deficit-reduction deals that included tax increases. Norquist predicted that Democrats expect Simpson to do the same in this new role.

The full panel has yet to be named. Six members, including Simpson and Bowles, are to be chosen by the president, with no more than four Democrats. In addition, three members will be chosen by Democratic and Republican leaders in each chamber of Congress, for a total of 12 congressional appointees.

Obama said the commission could give Congress political cover to enact debt containment measures for which voters might otherwise punish lawmakers.

"The politics of dealing with chronic deficits is fraught with hard choices, and, therefore, it's treacherous to officeholders here in Washington," Obama said. "As a consequence, nobody has been too eager to deal with it."

The commission is structured similarly to one proposed by Sens. Kent Conrad, D-N.D., and Judd Gregg, R-N.H., which last month failed to pass the Senate — seven of its Republican co-sponsors voted against it.

Obama's commission is significantly weaker; while the Conrad-Gregg plan would have required Congress to vote on proposals up or down, Congress could amend any recommendations from Obama's commission, filibuster them, or ignore them altogether.

Sen. Tom Coburn, R-Okla., said: "We already have a commission to confront our debt. It's called the United States Congress. If members of Congress aren't up to that task we don't need a new commission; we need a new Congress."

Conrad, however, said that given Congress' unwillingness to act on its own or even form a commission to guide itself, an executive commission is "the next best thing."

The president implored lawmakers to "step away from the partisan bickering and join this effort to serve the national interests.

"Without action, the accumulated weight of that structural deficit, of ever-increasing debt, will hobble our economy, it will cloud our future, and it will saddle every child in America with an intolerable burden."

(William Douglas and David Lightman contributed to this article.)


Can Obama's debt commission overcome Congress' politics?

McConnell voted against debt panel, but he has some suggestions

Another GOP no: Boehner slams Obama's fiscal panel

Job seekers will take jobs with unfavorable conditions

Senate Republicans: Filibuster everything to win in November?

Check out McClatchy's expanded politics coverage at Planet Washington