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Deficit Plan Proves Offensive to All, Leaders Admit, but Plan Gets Some Support

Updated at 2 p.m. ET

The leaders of President Obama's bipartisan deficit commission released a stark and far-reaching plan for reducing the deficit today that includes suggestions that could offend anyone -- some dramatic reductions in tax rates paired with some other tax increases, cuts in Medicare and a cap on government revenues, to name a few.

Yet as many as seven of the 18 commission members have already signed on to support the new plan, given what they say is the urgency of the matter. If 14 members support the plan, it will go to the Senate for a vote. If the Senate votes favorably, it will then go to the House for adoption.

Retiring Republican Sen. Judd Gregg said that despite his reservations, he will support the plan.

"There are no easy fixes here, so while I do not agree with all parts of the cochairmen's final proposal, I will support it because it represents a step forward that we urgently need," he said. "Inaction on our debt crisis is not an option at this point."

But at least one commission member said the plan does not deserve support.

Democratic Rep. Jan Schakowsky of Illinois, the deficit commission's most outspoken critic of the plan put forward by the commission leaders, said today that she will have to vote against the plan because it fails to address America's other fiscal crisis -- the growing disparity in income.

"I don't feel that this proposal addresses these dual problems of debt and inequality in the proper way," she said.

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Commission co-chairs Alan Simpson and Erskine Bowles said they worked to address some of the most pressing concerns their critics have aired, regarding scaling back Social Security benefits and undermining other valuable social programs.

"We don't want to do anything that disrupts a fragile economic recovery," Bowles said today at a meeting of the commission. "We want to protect the truly disadvantaged. We want to keep America safe and secure. We don't want to hollow out this country while we fix our balance sheet. We're going to have to continue to make sure we make smart investments in education and infrastructure."

Earlier this month, Schakowsky released her own "liberal" deficit reduction plan, which will be included as an appendix to the official report.

Calling Schakowsky his "canary in the coal mine," Simpson acknowledged that the plan may not get the 14 votes of approval he and Bowles are seeking from the 18-member commission. Yet he said the time has come to make hard decisions to cut the deficit -- and those decisions will be made, whether or not this plan is approved.

"Whether we get 2 votes or 18, this baby ain't going away," Simpson told his fellow commissioners. "When the votes for the budget and to extend the debt limit arrive... this cadaver will rise from the crypt."

The commission co-chairs named their plan "The Moment of Truth" to underscore that message.

The plan cuts the deficit in half by 2015 and three quarters by 2020. It also takes the deficit to about 2.2 percent of Gross Domestic Product by 2015. The plan proposes $200 billion in specific spending cuts, provisions $11 billion for annual disaster spending, reduces tax rates across the board so that the top rate does not exceed 29 percent, and it eliminates some tax deductions. It also cuts agriculture subsidies, eliminates certain targeted tax breaks, reduces the federal workforce by 200,000 people, and makes a number of other proposals.

With respect to Social Security, the chairmen call for "progressive" payouts, a slight increase in benefits for older Americans between 82 and 86 years old, and an increase in the retirement age. Currently, the Social Security retirement age is slated to increase to 67 in 2027, and this plan takes it to 68 by 2050. The plan also proposes a hardship exemption for those with physically demanding jobs who are compelled to retire earlier.

Democratic Sen. Richard Durbin of Illinois said he found the Social Security proposals acceptable. "To raise [the retirement age] one year over 40 years is hardly radical," he said.

Durbin said he only received the final version of the plan this morning and is thus not ready to say whether he will vote in favor of it on Friday. He said that as a progressive, he would judge the plan by seeing "where the most vulnerable in America -- the elderly, the poor, children -- how they fare."

The senator said he was "struggling to understand" the proposals to reduce the tax rates when "we've had times of great economic expansion in this country where our tax rates were substantially higher."

Schakowsky emphasized that the economy over the last several years has mostly benefited people already at the top. She pointed out that the top 10 percent of America controls 70 percent of the nation's total net worth.

"These numbers indicate that sacrifice has not been shared," she said. "We have more than 37 million Americans including 13 million children living in poverty, and most of those people have jobs... To say that we're going to reduce our deficit and our debt by asking Medicare beneficiaries to pay more for health care, I think it is absolutely unconscionable."

Durbin also warned against the proposals on health care, which along with cuts to Medicare included a proposal to limit deductions for health care premiums. The plan also calls for eliminating the CLASS Act -- a major portion of the Democratic health care overhaul, which would create a vast new government fund, financed through payroll deductions with opt-out enrollment, to insure people in the event they become disabled.

Durbin said the health care proposals are "hastening the day" when the only option is a public option. "The question is whether the private sector will reduce costs," he said. "This calls for a change in the private sector which they have not demonstrated they are willing to make."

While the other commissioners largely agreed that there were both appealing and unappealing parts of the plan, they generally praised it as a serious effort at deficit reduction.

Democratic Sen. Kent Conrad of North Dakota said there were parts of the plan that he disliked "intensely" but other parts were "grand slam home runs."

He said he would support the plan. "Whether or not we get 14 votes, I think this is going to provide a guide post for decisions that must be made," he said.

Acknowledging the controversial nature of his plan, Simpson asked his fellow commissioners, "Tell us why you don't like it and voted 'no', and tell us why you don't like it and voted 'yes.'"

Several liberal groups today put out statements decrying the deficit commission's report, including the AFL-CIO labor union organization. "With this report the Deficit Commission once again tells working Americans to 'Drop Dead,'" AFL-CIO president Richard Trumka said.

The liberal grassroots group sent an e-mail to its millions of supporters today urging them to call their congressmen to ask them to reject the plan. "The commission's report... focuses on making those who are struggling the most pay for a deficit that they didn't create -- while furnishing corporations and the super-rich with more tax breaks," the e-mail reads.

The "Citizens' Commission on Jobs, Deficits and America's Economic Future," one of a few liberal groups to release a counter-proposal, called the deficit commission's report "fundamentally misguided."

At least one left-leaning organization, the moderate group Third Way, praised the report, calling it "a major step toward stabilizing the nation's finances."

Stephanie Condon is a political reporter for You can read more of her posts here. Follow Hotsheet on Facebook and Twitter.
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