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Special Budget Panel Ends Tenure With No Consensus on How to Eliminate Deficit

Times Staff Writer

Once touted as the best hope for forging a solution to the federal budget deficit, the National Economic Commission went out of business as scheduled Wednesday not with a bang but with a whimper.

The 14-member bipartisan panel, established by Congress after the October, 1987, stock market crash to advise whoever was elected President in 1988, broke up in disarray with two separate reports that mirrored the longstanding split between Republicans and Democrats over the issue.

Its twin reports were released together with no fanfare. Many panel members were traveling on business, leaving them unavailable for comment.

Majority Backs Administration

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A majority of eight members--seven Republicans and one Democrat who was appointed by President Bush after the election--endorsed the Administration’s plan to clamp down on spending and avoid a tax increase.

The six remaining Democrats, in a more extensive statement, disputed the economic assumptions underlying Bush’s budget as overly optimistic but declined to recommend any other approach and steered clear of proposing tax increases on their own.

“We never really had a bipartisan debate,” said Robert S. Strauss, a well-known Democratic power broker who served as co-chairman of the panel. “When President Bush was elected, he wanted his flexible freeze (on spending) endorsed. I have no quarrel with that. He was elected President. The commission wasn’t.”

Both sides agreed on only one substantive point: that the buildup in Social Security reserves designed to help support baby boomers when they retire should not be used to pay for new programs. Instead, it should be set aside so that the federal government can run budget surpluses in the 1990s and the early years of the 21st Century.

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But without any consensus on how to eliminate this year’s $165-billion budget deficit over the next few years, such advice is likely to carry little, if any, weight in Congress.

“With little support or leadership from the President or Congress, the commission was unable to face up to the difficult issues,” said House Budget Committee Chairman Leon E. Panetta (D-Monterey). “It had no choice but to punt.”

Early Sign of Trouble

Members of the commission said its death knell was sounded as long ago as last February. That is when Bush, struggling to overcome Sen. Bob Dole (R-Kan.) in the New Hampshire GOP primary election battle, successfully seized upon Dole’s support for the panel to help tag him as an advocate of a tax increase.

Once Bush was elected, the Republicans on the committee--joined by Bush’s longtime friend, former Democratic lawmaker Thomas L. Ashley--rallied behind the White House budget proposal.

“The President didn’t want a bipartisan deficit-reduction plan,” complained Rep. William H. Gray III (D-Pa.), a member of the panel. “He wanted his own plan, the flexible freeze, and he insisted on it from Republican members.”

At the White House, presidential spokesman Marlin Fitzwater said the commission members “did the best they could.” The suggestions made in the majority report for reforming the budget process, he said, were “very useful.”

The panel’s Republican co-chairman, Drew Lewis, while agreeing with Strauss that Bush’s opposition to higher taxes made a bipartisan consensus nearly impossible to achieve, also blamed a court suit brought by several news organizations that forced the panel to hold all its meetings in open session.

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“It was virtually impossible to meet as a bipartisan group and really hash out the tough issues with the press there,” Lewis said.

Republicans on the commission, following the lead of former Defense Secretary Caspar W. Weinberger, said Congress should avoid further cuts in the Pentagon budget and change the Gramm-Rudman budget balancing law to shield more defense spending from any automatic cuts that might be imposed. But Ashley dissented from his GOP cohorts on that point.

Democrats charged that Bush’s focus on slashing a number of domestic programs “is inherently unbalanced and cannot be sustained over the long term.” They said “a proposal that relies on overly optimistic economic assumptions and severe domestic spending cuts may work for one year but over the long term is neither theoretically sound nor politically realistic.”

The majority, however, supported Bush’s budget as “one workable plan for eliminating the deficit” but also said any alternative that would balance the budget by 1993 was acceptable as long as taxes were not increased.

Indeed, Republicans argued that it is much more important to avoid a tax hike than to close the budget gap. In contrast with the Democrats, who urged generating budget surpluses in the 1990s to “transform our economy and secure our future,” the majority warned that “the nation must not expect that a balanced budget, or even government surpluses, will solve all our economic problems.”


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