Nov. 1, 2011, 3:12 p.m. EDT
Fiscal experts sternly warn supercommittee
Lack of deal won’t lead to ratings change, Moody’s says
By Robert Schroeder, MarketWatch
WASHINGTON (MarketWatch) — The heads of high-profile deficit-cutting commissions on Tuesday urged the congressional supercommittee to aim high just weeks ahead of its deadline, saying failure to reach an agreement about shrinking the U.S. debt could result in another downgrade.
Erskine Bowles, co-chair of President Barack Obama’s fiscal commission, told the supercommittee’s 12 members that if they “go big” and shrink the deficit by more than their $1.2 trillion mandate, Americans will support them. But he said he was concerned that the members wouldn’t reach agreement.
“Collectively, I’m worried you’re going to fail, fail the country,” Bowles told supercommittee members at the panel’s fifth public hearing.
Bowles and former Wyoming Republican Sen. Alan Simpson co-chaired a commission last year that recommended about $4 trillion in saving over 10 years.
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The budget experts’ testimony came about three weeks before the supercommittee’s Nov. 23 deadline. Its six Democrats and six Republicans are tasked with identifying at least $1.2 trillion in deficit reduction. If they can’t agree, $1.2 trillion in automatic cuts kick in by 2013, divided equally between defense and non-defense programs.
In public, at least, supercommittee members still appear far apart on how to achieve savings. Co-chair Rep. Jeb Hensaling, a Texas Republican, said the supercommittee can’t “tinker around the edges” of entitlement programs like Medicare and Medicaid.
Democrats, however, have resisted making cuts to those programs part of the supercommittee’s work. Sen. Patty Murray of Washington, the panel’s other co-chair, said Tuesday that big corporations and the wealthiest Americans must contribute to deficit reduction. She appealed to both parties to make sacrifices to reach a deal.
“Now is the time when everyone needs to be putting some real skin in the game,” she said.
Simpson and Bowles said in their written testimony that the only thing worse than failure by the committee to agree on savings would be removing the “sequester” mechanism for automatic cuts.
“Removing that option by successfully voting out a plan should be strived for,” Bowles and Simpson told members in their testimony.
“A failure by this committee might result in another downgrade,” they said.
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Full story: http://www.marketwatch.com/story/bowles-simpson-warn-of-us-downgrade-2011-11-01
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