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Debt Debate Offers Something For Everyone To Hate

The debt and the deficit are the big subjects of the moment in Washington. On Wednesday, yet another bipartisan group will try to tackle the problem of the mounting national debt with a plan to bring the country's fiscal situation back into balance.

There's wide agreement that the current situation is unsustainable: Spending is increasing faster than the economy or tax revenues can grow. Exit polls in the midterms showed that -- along with jobs -- this is a top concern of voters.

But there's no agreement on how to solve the problem, says former Clinton budget director Alice Rivlin -- the only person who's serving on all three of the deficit panels presenting reports over the next few weeks.

National Commission on Fiscal Responsibility and Reform

Headed by: Alan Simpson, former Republican senator from Wyoming; and Erskine Bowles, chief of staff to President Bill Clinton

Recommendations: The final report from the president's deficit commission is supposed to come out by Dec. 1. But the co-chairmen released a draft proposal that would cut domestic and military spending, reduce benefits for some future Social Security recipients, and simplify the tax code. They also gave more than 50 examples of how to get $200 billion of spending out of the budget by 2015 in domestic and military cuts.

Bipartisan Policy Center's Debt Reduction Task Force

Headed by: Republican Pete Domenici, former Senate Budget Committee chairman; and Alice Rivlin, former Clinton budget director and Federal Reserve vice chair

Recommendations: The group is set to release its report on Wednesday, but Rivlin said Tuesday it will have a "much simpler, lower [tax] rate, broader base income-tax and corporate income tax with a considerably lower corporate tax rate that will bring us back into the range that other countries are in." It will also include a consumption tax, she said.

Peterson-Pew Commission on Budget Reform

Headed by: Former Reps. Bill Frenzel (R-MN); Timothy Penny (D-MN); and Charlie Stenholm (D-TX)

Recommendations: On Nov. 10, the group released a report calling for a reform of the federal budget process by implementing "fiscal targets, budgetary triggers, and increased transparency." The commission recommended that the debt be stabilized at 60 percent of GDP by 2018.

"I think the public doesn't understand the choices very well yet," Rivlin says, "and that's because in the election, there were a lot of people saying, 'It's really easy -- just do this one simple thing.' Just cut the spending or just raise the taxes or just cut out waste, fraud and abuse. But if you sit down with the numbers and look at what the government actually does and how it pays for it, it's obvious that there is no simple solution."

A Trap?

The proposal Rivlin's bipartisan task force will unveil Wednesday, like the one the chairmen of the president's deficit commission released last week, has something for everyone to hate: spending cuts and tax hikes. And it will probably be attacked the same way that first proposal was -- by advocates on the left and right.

On one side of this fight is Democratic congressional leader Nancy Pelosi, who called the proposal "simply unacceptable," and Roger Hickey of the labor-backed Campaign for America's Future.

Hickey sees the deficit commissions as a trap for Democrats. "Starting this deficit commission, it has shifted the entire discussion away from 'how do you get jobs' to 'how do you get deficits under control,' " he says. "It would be the worst thing in the world for the Democrats to allow conservatives to mousetrap them into embracing cuts -- draconian cuts, really -- to Social Security."

While Republican congressional leaders were relatively silent, conservative activists were not. Grover Norquist, whose "no new taxes" pledge has been signed by hundreds of officeholders, also says the proposals are a trap -- but for Republicans.

"The deficit is what Democrats talk about when they're trying to shift the conversation from their spending," he says. "The problem is spending. You can only fix a spending problem by spending less. Raising taxes is being an enabler -- not helping to reduce the spending problem."

Resolving The 'Hugh Jidette'

President Obama sees himself somewhere in the middle. He's always said he doesn't want to kick the can down the road on these fiscal issues.

But, as he told 60 Minutes shortly after the midterm elections: "If you eliminate all the earmarks, you eliminate all the foreign aid, you eliminate all the waste and abuse that people, you know, talk about eliminating, you're still confronted with the fact that the vast majority of the federal budget are things that people really think are important -- like Social Security and Medicare and defense. And so you then have to start making some tough decisions about how do we pay for those things that we think are important."

Right now, there's not a constituency for those tough decisions, but there is an effort to create one. The Peterson Foundation is trying to educate people about the dangers of the growing debt with an ad starring a fake presidential candidate named Hugh Jidette -- "huge debt," get it?

"As president, I promise your taxes will help build roads, bridges and schools," he says in the ad. "Oh, not here. Overseas. I'll keep using your taxes to pay over $100 billion a year in interest to foreign lenders -- helping their economy, hurting ours."

Implicit in all the deficit reduction proposals is a challenge to groups on both the left and right -- to come up with alternatives to the recommendations they oppose.

Hickey says his group plans to do just that. "I'm happy to announce that with all of these right-wing commissions, we at the Campaign for America's Future ... are going to come out with our own report on how you get deficits under control by growing the economy and investing in the future."

While there may be no resolution to this debate anytime soon, the issue is set to be the next big conversation in American politics -- and maybe the subject of the next election.

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Transcript

MELISSA BLOCK, host:

Tomorrow, we'll hear yet another bipartisan plan for how to bring down the national debt and restore balance to our fiscal policy. Only last week, the heads of President Obama's debt commission released their own report. That effort was bipartisan, both in the political leanings of its co-chairs and in the fact that the report offended people on both sides of the aisle.

NPR's Mara Liasson reports now on where this contentious debate is heading.

MARA LIASSON: The big subject of the moment in Washington is the debt and the deficit. There's wide agreement that the current fiscal situation is unsustainable; spending is increasing faster than the economy or tax revenues can grow. Exit polls in the midterms showed that, along with jobs, this is a top concern for voters.

But there's no agreement on how to solve the problem, says former Clinton Budget Director Alice Rivlin, the only person who's serving on all three of the deficit panels that will present reports over the next few weeks.

Dr. ALICE RIVLIN (Former Budget Director, White House): I think the public doesn't understand the choices very well yet. And that's because in the election, there were a lot of people saying: It's really easy, just do this one simple thing; just cut the spending or just raise the taxes or just cut out waste, fraud and abuse.

But if you sit down with the numbers and look at what the government actually does and how it pays for it, it's obvious that there is no simple solution.

LIASSON: The proposal Rivlin's bipartisan task force will unveil tomorrow, like the one the chairman of the president's deficit commission released last week, has something for everyone to hate: Spending cuts and tax hikes. And it will probably be attacked the same way that first proposal was, by advocates on the left and right.

On one side of the fight is Democratic congressional leader Nancy Pelosi, who called the proposal simply unacceptable, and Roger Hickey of the labor-backed Campaign for America's Future. He sees the deficit commissions as a trap for Democrats.

Mr. ROGER HICKEY (Campaign for America's Future): Starting this deficit commission has shifted the entire discussion away from how do you get jobs to how do you get deficits under control. It would be the worst thing in the world for the Democrats to allow conservatives to mousetrap them into embracing cuts - Draconian cuts, really, to Social Security.

LIASSON: While Republican congressional leaders were relatively silent, conservative activists were not. Grover Norquist, whose no new taxes pledge has been signed by hundreds of office holders, also says the proposals are a trap, but for Republicans.

Mr. GROVER NORQUIST (Americans for Tax Reform): The deficit is what Democrats talk about when they're trying to shift the conversation from their spending. The problem is spending. You could only fix a spending problem by spending less. Raising taxes is being an enabler, not helping to reduce the spending problem.

LIASSON: President Obama sees himself somewhere in the middle. He's always said he doesn't want to kick the can down the road on these fiscal issues. Here's what he told "60 Minutes" shortly after the midterm elections.

(Soundbite of show, "60 Minutes")

President BARACK OBAMA: If you eliminate all the earmarks, you eliminate all the foreign aid, you eliminate all the waste and abuse that people, you know, talk about eliminating, you're still confronted with the fact that the vast majority of the federal budget are things that people really think are important, like Social Security and Medicare and defense. And so you then have to start making some tough decisions about, how do we pay for those things that we think are important?

LIASSON: Right now there's not a constituency for those tough decisions, but there is an effort to create one. The Peterson Foundation is trying to educate people about the dangers of the growing debt with this ad starring a fake presidential candidate.

(Soundbite of ad)

Unidentified Man: I'm Hugh Jidette.

LIASSON: Get it? Huge debt.

(Soundbite of ad)

Unidentified Man: I promise your taxes will help build roads, bridges and schools. Oh, not here - overseas. I'll keep using your taxes to pay over $100 billion a year in interest to foreign lenders - helping their economy, hurting ours. I'm Hugh Jidette. Let's keep borrowing.

(Soundbite of music)

LIASSON: Implicit in all the deficit reduction proposals is a challenge to groups on both the left and right - to come up with alternatives to the recommendations they oppose.

Roger Hickey says his group plans to do just that.

Mr. HICKEY: We are taking up the challenge that if you don't like what we're proposing - and we don't, we really don't - what are you going to do about the economy? And what are you going to do about the deficit?

I'm happy to announce that with all of these right-wing commissions, we at the Campaign for America's Future, we are going to come out with our own report on how you get deficits under control by growing the economy and investing in the future.

LIASSON: While there may be no resolution to this debate anytime soon, the issue is set to be the next big conversation in American politics. It's the kind of thing elections are supposed to be about. It wasn't the subject of the one we just had - maybe it will be for the next one.

Mara Liasson, NPR New, the White House. Transcript provided by NPR, Copyright NPR.

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