Get Ready for Another Deficit Plan

As if one weren’t enough, now another group is expected to introduce its own take on how to cut the federal budget deficit.

Last week, the two co-chairs of President Obama’s bipartisan deficit commission, former Sen. Alan Simpson, R-Wyo., and former White House chief of staff Erskine Bowles, presented their proposed plan in advance of the full 18-member commission’s final report (see Deficit Panel Unveils Plan). While there were the expected shrieks of dismay at the proposed sacrifice of some sacred cows like the mortgage interest deductions, some commentators at least gave the two leaders plaudits for producing some serious proposals on some touchy matters like raising the minimum retirement age for Social Security.

However, the consensus seemed to be that whatever plan the full commission manages to approve (which itself is not a certainty) in time for its December 1 deadline, Congress stands little chance of passing it, unless it is forced to do something in the event of another financial crisis, such as the bond market crumbling or China closing its wallet to U.S. debt purchases.

The alternative plan, from the Bipartisan Policy Center’s Debt Reduction Task Force, is expected to become public Wednesday, according to The Wall Street Journal. The group is chaired by former Senate Budget Committee Chairman Pete Domenici, R-N.M., and former White House Budget Director and Federal Reserve Vice Chair Alice Rivlin.

According to the Journal, the proposals will include a one-year payroll tax holiday in 2011, a reduction in individual and corporate income tax rates, a 6.5 percent national consumption tax, and an excise tax on sugary drinks. Despite the soda tax, let’s hope this plan gets a sweeter reception than last week’s plan. You can tune in to the Bipartisan Policy Center’s website at 10 am Eastern time to watch the live announcement.