Obama Debt Panel Leaders Call for $2T in Cuts

(Newsroom America) -- The leaders of President Barack Obama's debt panel said Democrats should agree to demands by Republicans to cut $2 trillion in spending in order to get an agreement to boost the government's borrowing limit.

The cuts would amount to a "down payment" on "a $4 trillion-plus, gimmick-free fiscal consolidation package that stabilizes and then reduces our debt as a share of the economy," said Erskine Bowles, the White House chief of staff during the Clinton administration, and former Sen. Alan Simpson, R-Wyo., in an op-ed published in The Hill newspaper Tuesday.

That kind of fiscal consolidation plan is "what this country needs -- and what the American people deserve," they wrote.

That said, such fiscal reform can't be accomplished in time by the Aug. 2 deadline when the Treasury Department says the government will default on its loans if the current $14.3 trillion debt ceiling isn't raised, they said.

The two warn that unless a deal is reached and a two-phase reform plan set in motion, "debt will eclipse the size of the entire economy just a decade from now, and by the mid-2030s will be so high that (the Congressional Budget Office) doesn’t bother measuring it."

"The consequences of this path are grave: Slower economic growth, more taxpayer money going to pay for interest on the debt, less flexibility to address important needs or future emergencies, and — sooner or later — the most predictable financial, fiscal and economic crisis we have ever faced," they said.

Republican leaders have said any agreement to raise the debt ceiling by $2 trillion, which is sought by Treasury Secretary Timothy Geithner and the White House, must be offset by an equal amount of budget cuts.

But the time to reach a deal is now, Bowles and Simpson said.

"There can be no more kicking the can down the road or handing the baton to the next guy," they wrote. "The markets won't allow it and the American people should not tolerate it."

The 18-member National Commission on Fiscal Responsibility and Reform released a report in 2010 calling for domestic and military spending cuts by 2012.

Obama became part of the budget talks on Monday after they broke down last week when Republicans quit in frustration over Democrats' insistence on raising taxes.

© 2011 Newsroom America.

Contact Jon E. Dougherty