Federal deficit plan fails to snag votes needed for Congressional debate

David Gura Dec 3, 2010

Federal deficit plan fails to snag votes needed for Congressional debate

David Gura Dec 3, 2010

By David Gura

Lobbyists and advocacy organizations began quarreling with parts of the deficit-reduction plan as soon as the proposal became public.

The plan, proposed by the National Commission on Fiscal Responsibility and Reform, calls for a long list of spending cuts, raising the retirement age to 68, and eliminating many middle-class tax breaks. It proposes an increase in out-of-pocket payments for Medicare recipients, and reevaluating defense spending. Although the report didn’t get the 14 votes it needed to be sent to Congress for debate, it is likely many of its recommendations will receive further consideration by legislators.

Former Sen. Alan Simpson, co-chairman of the commission, said the critics were being obstructionist, and called them “practitioners of the dark arts.” United in their opposition to the commission’s recommendations, the groups made for some strange bedfellows, at least.

AARP, which represents millions of Americans over 50 years old, was worried about recommendations that could affect health care and retirement benefits. According to Cristina Martin-Firvida, director of the organization’s economic security program, “Social Security offers a modest benefit already. A 20 percent reduction, or a greater reduction, would significantly erode retirement income.”

Terry Headley, who heads the National Association of Insurance and Financial Advisors, a group with 200,000 members, was also concerned about how cuts might affect life insurance policies and retirement savings.

He found one of the commission’s proposals, known as the “Zero plan,” particularly worrisome. It recommended the elimination of tax credits and deductions. “That would put all tax expenditures on the table,” Headley said. “And of course, tax expenditures are what would get to the heart of the products that we offer.”

The National Association of Home Builders didn’t want Congress to touch the home mortgage deduction. “To do this to an industry that’s already battered, it’s just catastrophic,” Joe Stanton, the group’s chief lobbyist, said.

Many unions and political organizations rejected the Commission’s plan outright. “I think Congress should drop this document in the trash, and then begin a real conversation about how to get our economy moving again,” Justin Reuben, the president of MoveOn, said. His group represents more than 5 million self-identified progressives.

Mary Kay Henry, president of the Service Employees International Union, agreed that, with the economy in bad shape, the federal government’s focus should be on creating jobs above all else.

“For this deficit commission to issue a report that prioritizes balancing the budget before we get America back to work,” she said, is wrong.

Members of the health care sector don’t want to see changes to Medicare, on the heels of the landmark health care overhaul.

“We need to do reform, but it’s got to be focused in the right direction,” Chip Kahn, president and CEO of the Federation of American Hospitals, said. His organization is composed of for-profit hospitals and health systems. “I think that part of the proposal will need to be moderated and needs to be more realistic, considering the legislation that just passed.”

Tom Nickels, senior vice president of federal relations for the American Hospitals Association, shared many of Kahn’s concerns. “We were very disturbed to see that the Commission seemed to bypass what was done by Congress in health care reform and approve or recommend additional reductions,” he said.

Kahn and Nickels both said they were worried about a proposal to reduce funding for training new doctors.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.