Budget veterans have advice for ‘super committee’

Political heavyweights from past budget debates descended on the congressional “super committee” to deliver a tough message as the panel struggles to agree on a $1.5-trillion deficit reduction plan by its Thanksgiving deadline.

The four veterans offered their expertise — along with some criticism — as they implored the committee to worry less about the partisan political climate and more about the economic harm that could come to the financial markets and nation’s credit rating if a big deal could not be reached.

“I’m worried you’re going to fail,” said Erskine Bowles, the former Clinton administration official and co-chairman of President Obama’s fiscal commission, who sketched out a back-of-the napkin compromise to help the panel avoid that fate.

“The effect it would have on how people look at this country would be disastrous,” he said.

“Devastating,” agreed Alice Rivlin, founding director of the Congressional Budget Office. She warned of a long period of stagnant economic growth, “worse than the one we’re climbing out of,” if global markets dismissed Congress as dysfunctional.

Tuesday’s public session came as the committee, made up of six Democrats and six Republicans, has been meeting mostly behind closed doors to develop a proposal to cut deficits over the next decade.

Failure by Congress to approve a compromise would trigger mandatory cuts, slicing equally across defense and domestic accounts, that both sides want to avoid.

But because the mandatory cuts would not take effect until 2013, many in Congress think they can undo them in the year ahead. Even as private conversations among smaller groups of committee members continue, the panel has essentially deadlocked along partisan lines.

Republicans are refusing to raise taxes to help reduce federal deficits. Most GOP lawmakers have signed an anti-tax pledge from conservative activist Grover Norquist’s Americans for Tax Reform and are hesitant to be targeted by his group in the 2012 election.

Democrats portray their offer as having met Republicans part way by proposing to make cuts in Medicare and other entitlement programs — but only if the GOP concedes on some new taxes. Democrats want to raise taxes on wealthier Americans and limit loopholes.

The Democrats’ “balanced approach” got an assist from the fiscal hawks Tuesday when Sen. Patty Murray (D-Wash.), the panel’s co-chairwoman, asked the experts for a show of hands if they agreed that both revenue and taxes should be in the mix.

All four of the budget experts, including two former Republican senators, raised their hands.

The quartet included fiscal commission co-chairman and former Sen. Alan Simpson (R-Wyo.) and former Sen. Pete V. Domenici (R-N.M.). They urged the committee to go beyond its mandate and reduce deficits by more than $4 trillion to further stabilize the country’s finances.

Spending cuts must be serious, the budget hawks said, but should be delayed until the economy improves. Simpson and Bowles noted that their commission found revenue by reducing tax rates and limiting so-called tax expenditures — the loopholes and special deductions that they say are simply spending by another name.

Simpson lashed out at Norquist’s objection to closing tax loopholes as a way to raise revenue. Norquist promotes the theory that ending one tax break must be matched with a tax cut elsewhere.

“The fun and games are over,” Simpson said. “We could get the violin out.”

Both sides want to engage in a revamping of the tax code, but Republicans on the panel showed little inclination to veer beyond that goal. One path out of the gridlock could be for the committee to assign other congressional panels the task of tax and entitlement changes.

The GOP co-chairman, Rep. Jeb Hensarling of Texas, suggested that Social Security changes should be on the table.

“Social Security faces its problems as well,” Hensarling said. “Certainly we cannot tax our way out of this crisis.”

Several people in the audience wore red AARP T-shirts. The senior citizens’ organization has been running a television ad warning the super committee that its 50 million members will not look fondly on lawmakers who trim entitlement benefits.

But the experts warned that entitlement programs should not be off-limits. Simpson called the AARP ads “disgusting” for trying to dissuade committee members from cutting entitlement programs.

“People admire guts and courage,” Simpson said. “In your gut, you know what you have to do.”

lisa.mascaro@latimes.com