The US fiscal commission’s ability to forge a consensus on measures to shrink the budget deficit has been complicated this week by the public release of two competing proposals by members of the panel.
On Wednesday, Alice Rivlin, former budget director under Bill Clinton and a commission member, unveiled her own detailed recommendations for ways to curb America’s mounting debt burden, alongside Pete Domenici, the former Republican senator.
The plan by Ms Rivlin and Mr Domenici, which includes the imposition of a 6.5 per cent consumption tax on the US economy, calls for even more aggressive measures than the $3,800bn in cuts through 2020 proposed by the fiscal commission’s co-chairs Erskine Bowles and Alan Simpson last week.
However, it would also offer a one-year payroll tax holiday for individuals and businesses, in order to stimulate the economy before the cuts kick in from 2012.
In an interview with the Financial Times, Mr Domenici said the soaring US debt was a “silent killer” and “as big as a world war” because it would destroy America’s future and turn it into a “second rate country”.
The plan, crafted by Ms Rivlin and Mr Domenici as part of a 19-member group assembled by the Bipartisan Policy Center, came a day after Jan Schakowksy, an Illinois Democrat on the fiscal commission, offered her own detailed proposals to shrink the deficit that also stood in contrast to what Mr Bowles and Mr Simpson proposed last week.
Although there may be some hope that the release of competing visions from different members of the commission could catalyse the panel into a compromise, it could also heighten divisions within group and further harm the slim chances of a deal.
“I think it’s very unfortunate that individual commission members are releasing their own plans before the commission has acted,” said David Walker, former US comptroller general and now a fiscal activist.
“I think it’s inappropriate and it doesn’t help.”
But, Mr Walker did praise the substance of the Rivlin-Domenici plan, calling it “good work” and saying that it should be viewed as a “supplement to, not a substitute for”, the fiscal commission, which was set to hold its latest closed session on Wednesday.
Fears have been mounting that the fiscal commission may not reach the 14 out of 18 member majority required for formal recommendations that would be voted on in Congress owing to sharp divisions between Democratic and Republican lawmakers on the panel.
In addition, Harry Reid, Senate majority leader, and John Boehner, future Republican House speaker, have refrained from pledging a vote on the commission package in 2011.
“My personal view is if they are able to get 14, they deserve a vote in the next Congress: no ifs ands or buts,” said Mr Walker. But he also said that it was “unrealistic” to expect a deal, and the most likely scenario would be that the proposals would be considered on a piecemeal basis in the coming years.
“From a practical standpoint President Obama will have to decide . . . which recommendations he is going to embrace as his own and incorporate into 2012 budget and legislative agenda,” Mr Walker said. “Then he will have to go to the American people and make the case.”