WASHINGTON – Two years ago this month, the leaders of a presidential commission rolled out a startling plan to dig the nation out of debt.
After decades of profligacy, they said, Washington must tell people to work longer, pay higher taxes and expect less in retirement.
Lawmakers recoiled from the blunt prescriptions of Democrat Erskine Bowles and Republican Alan Simpson. But their plan has since been heralded by both parties as a model of clear-eyed sacrifice.
When Congress returns to Washington on Tuesday, the most urgent task facing President Obama and congressional leaders will be avoiding the year-end fiscal cliff, a towering accumulation of $500 billion in budget cuts and expiring tax breaks that would abruptly reduce government borrowing but could trigger a new recession.
Avoiding hard decisions could have grave consequences, analysts say, potentially undermining the U.S. economic recovery.
I think this is the magic moment, said Bowles, a veteran negotiator who served as chief of staff in the Clinton White House. Theyve got to compromise. And I think if you listen carefully to what all the politicians are saying, theres room to get something done.
Few expect Washington to replicate the scope of the Bowles-Simpson plan. Though it is widely praised, its $4 trillion in 10-year savings includes major changes to Social Security opposed by liberals and an aggressive new tax code that would generate far more revenue than most conservatives could stomach.
Last week, House Speaker John Boehner, R-Ohio, publicly urged Obama to return to a less ambitious framework drafted in secret during the summer of 2011, when the two men came tantalizingly close to compromise. That blueprint would save about $2 trillion, on top of $1.3 trillion in agency cuts already in force.
About half the new savings would come from reversing part of the massive tax cuts that are a major cause of current budget problems. The rest would come from lower spending, including on Social Security and Medicare.
Boehners offer last week to raise revenue through tax reform was a positive sign, Obama senior campaign adviser David Axelrod said Sunday on CBSs Face the Nation.
While Obama is demanding higher taxes on the wealthy and Boehner is resisting an increase in the top tax rate, Axelrod said, obviously, theres money to be gained by closing some of these loopholes and applying them to deficit reduction. So I think there are a lot of ways to skin this cat so long as everybody comes with a positive, constructive attitude toward the task.