Deficit Proposal Picks Up New Allies

Sen. Mark Warner, left, and Sen. Saxby Chambliss are seen on Capitol Hill on Jan. 25 prior to President Obama's State of the Union address.

From The Wall Street Journal:

The effort of a bipartisan group of senators to attack the long-term budget deficit has won notable new support in recent days, raising lawmakers' hopes of reaching a deal within weeks.

Sens. Mark Warner (D., Va.) and Saxby Chambliss (R., Ga.), who are leading the push, believe they have the tentative backing of 31 senators: 16 Republicans and 15 Democrats.

Democrat Erskine Bowles and Republican Alan Simpson, who co-chaired the White House's deficit-reduction commission last year, have embraced the effort and launched a new nonprofit organization to raise public awareness about the debt and possible solutions.

Pete Peterson, the New York billionaire who often funds projects aimed at cutting the debt, met with Messrs. Warner and Chambliss Wednesday morning and said in an interview later he was "seriously" considering giving money to the nonprofit.

And Sen. Chuck Schumer (D., N.Y.), who many had seen as a potential obstacle of the senators' effort to build a larger consensus within Congress, threw his support behind the process Wednesday.

Messrs Warner and Chambliss and four other senators, the so-called Gang of Six, are seeking to craft a proposal that would shave $4 trillion off the federal government's projected budget deficit over 10 years.

The package under consideration would essentially force Congress, within a short period of time, to come up with changes to spending and tax rules to achieve that goal over the next decade.

Republicans have agreed to consider raising new revenue through the tax code—without raising tax rates—and Democrats have agreed to trim Medicare benefits, moves that would be major concessions from both parties.

The effort faces many hurdles. Nearly two decades have passed since Washington reached a significant deficit-reduction agreement. Many past attempts to trim the growth of Medicare or Social Security benefits have met fierce opposition.

However, lawmakers and others involved in this process said the moment feels ripe for a deal. "It's the first time that this significant a group of Senate leaders has been focused on doing something," Mr. Peterson said. "I haven't seen anything like this, if ever, in a long, long time."

A February Wall Street Journal/NBC News poll found that far more Americans believe it is not necessary to cut spending on the two major entitlement programs, Social Security and Medicare, in order to significantly reduce the deficit. At the same time, several specific ideas for saving money in those programs—raising the Social Security retirement age and reducing benefits for the wealthy—won majority support.

The success of the senators' efforts will depend on whether it is endorsed at some point by President Barack Obama. White House officials have been briefed on progress but have mostly stayed on the sidelines, people familiar with the matter said.

White House budget director Jacob Lew said, "We think it's a good thing to have members looking for bipartisan conversations where they are exploring ideas."

Senate Majority Leader Harry Reid (D., Nev.), whose support would be crucial, hasn't indicated where he stands on the talks. Mr. Chambliss said he has been briefing House Speaker John Boehner (R., Ohio) on the project in hopes of lining up House Republican support.

Lawmakers appear split over how quickly to propose the package. Some believe they could try and attach it to a coming vote in a few weeks on whether to raise the government's borrowing limit above $14.3 trillion. But Messrs. Chambliss and Warner have said they don't know if their effort will be completed in time.

Mr. Warner and four other members of the Gang of Six dined with Messrs. Bowles and Simpson Monday night in Washington, and jointly held an event on Capitol Hill Tuesday, pledging to join forces to slow the growth of the government's debt, which now totals $14.1 trillion. That figure is projected to rise rapidly in coming years as the nation spends more on the pensions and health care of its aging population, among other things.

The interest payments on the debt are rising at an alarming rate. Current projections show in 10 years the federal government's net interest bill rising to $928 billion annually. That would be 17% more than the government would pay to provide health care to the elderly through Medicare that year, and 82% more than the cost of all non-security discretionary spending programs.

By 2080, the country would be spending more than 10% of its entire gross domestic product—that is, more than 10 cents of every dollar of goods and services produced—just to pay interest.

Messrs. Bowles and Simpson said the country could face a major fiscal crisis within two years if the government fails to slow the growth of the debt.

"We will continue to bang away at all our elected leaders to produce a solution," Mr. Bowles said at the event.

Meanwhile, House Republicans are launching their own campaign to persuade voters that big overhauls are needed for Social Security and Medicare

That mission, said Rep. Paul Ryan (R., Wis.), chairman of the House Budget Committee, is "not unlike what Erskine and Alan have tried to do around the country to educate the country on the state of our fiscal crisis."

The six senators' package is modeled on the recommendations of the commission chaired by Simpson and Bowles.

Mr. Ryan said he too would incorporate parts of that plan into his 2012 budget proposal, due out next month. "There are a lot of things we think are good ideas in there," he said.

House GOP lawmakers plan to begin their education campaign during Congress's weeklong recess beginning March 19. In preparation, Mr. Ryan and Rep. Kevin McCarthy (R., Calif.) are holding sessions with 20 or so GOP lawmakers at a time to go over the financial challenges.

Mr. Ryan delivers a PowerPoint presentation at the sessions called "The Choice of Two Futures" that illustrates, with a partisan tinge, the role of Social Security and Medicare spending in the growth of the debt. The slides have headings like "Reckless Spending Spree" and "Tidal Wave of Debt."

"The goal is to talk about educating [House members] as to the nature of our fiscal problem, the magnitude of it, so they can go home and talk to their constituents about it," Mr. Ryan said.