Panel May Delay Report on Deficit Trims

Bowing to the political and economic complexities of deficit reduction, the co-chairmen of the National Economic Commission said Sunday that they might delay issuing their recommendations on how to trim the $155-billion budget deficit to give President-elect George Bush the first crack at solving the problem.

“I think the timing of our report would better serve the President if it were Sept. 1 (rather) than March 1,” said Drew Lewis, former secretary of transportation and a Republican member of the 12-person, bipartisan commission that was created by President Reagan and Congress.

Lewis, during an appearance on NBC-TV’s “Meet the Press,” added that Bush deserves a chance to see if his “flexible freeze” approach to budget reduction will work before the high-level advisory panel puts forth its own strategies.

Deny Friction

Both Lewis and former Democratic National Chairman Robert S. Strauss rejected suggestions that the commission is bitterly divided and they also denied that such a delay would weaken the political impact of its recommendations.

However, they acknowledged that some members continue to disagree over the possibility of imposing new taxes, as well as the role that the panel should play in the deficit reduction process.

While the commission is looking mainly at spending reductions to shrink the deficit, both men said that they may have no choice but to consider some new revenues, such as so-called “sin taxes” on gasoline, alcohol or tobacco.

“I have been looking only at spending cuts (but) I must tell you that in my judgment I have not found sufficient spending cuts to make up the shortfall,” Strauss said. “I haven’t seen any way to get there without some increased revenue.”

Lewis cautioned, however, that if the commission were to recommend a tax increase, the billions of dollars in new money would have to be strictly earmarked for deficit reduction.

‘Tied With Reduction’

“It has to be tied with a reduction . . . so that Congress doesn’t waste that money in some other program that doesn’t address the deficit,” he said.

As for spending cuts, Strauss suggested that some federal programs might be ripe for cutting, such as Social Security benefits for wealthy individuals. Currently, upper-income Social Security recipients pay taxes on 50% of their benefits. Some members of the National Economic Commission have suggested increasing the rate to 85%.

“A fellow like me who has a large income who receives Social Security today pays no taxes on a big part of it,” he said. “That’s crazy, that’s an outrage that I do that.”

Lewis said that the bulk of spending cuts may have to come from so-called “entitlement programs” such as Social Security, rather than defense spending.

“Whatever you do on defense doesn’t give you an immediate reduction in the deficit, mainly because the expenditures are already planned (over several years),” he said. “And long-term, if you look at defense, I think we could have, conceivably, a no-growth defense budget keeping pace with inflation.”