The initial meeting of the White House deficit commission kicked off as a bipartisan panel considered ways to curb the growing federal budget deficit and the national debt.
Everything has to be on the table, said Obama. Im not going to say whats in. Im not going to say whats out. I want this commission to be free to do its work.
Senate Finance Committee Chairman Max Baucus, D-Mont., said he believes the National Commission on Fiscal Responsibility and Reform should focus on the three gaps: the tax gap, the spending gap, and the productivity gap.
He attributed the $345 billion tax gap to three sources: 80 percent from understated income or over-stated deductions and credits, 10 percent from non-filers, and 10 percent from taxpayers who fail to pay their taxes on time.
If we can put a man on the moon, and we can think about landing an astronaut on Mars, we can collect more of the taxes owed, he said. And we should not cut one dime of federal benefits, or raise one dime of federal taxes, until we have done everything we can to collect the taxes that are already owed. Collecting these taxes will reduce our deficit, without raising taxes on anyone.
Federal Reserve Chairman Ben Bernanke said the U.S. would have to decide between raising taxes and making choices on some of its spending programs.
Choices regarding Medicare, Social Security, and other spending programs cannot be made in a vacuum but must be combined with decisions about how much revenue the government will raise and how it will raise it, he said. No laws are more basic than the laws of arithmetic: For fiscal sustainability, whatever level of spending is chosen, revenues must be sufficient to sustain that spending in the long run. At the same time, economic vitality is enhanced when taxes are not excessive and are collected through a system that is economically efficient, equitable, and transparent. At present, a broad consensus exists that the U.S. Tax Code does not satisfy these criteria and is in need of reform. I suspect that it is too much to ask the commission to review the Tax Code in detail, but a full picture of our budgetary dilemma will require attention to the strengths and weaknesses of our current system of raising revenue.
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