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Entries in Debt Commission (2)

Wednesday
Dec012010

Fact Check: Hard Steps Ahead to Reduce the Federal Deficit

Photo Courtesy - Getty Images(WASHINGTON) -- A presidential commission had a wakeup call for the nation Wednesday, releasing a document that outlines the tough choices the country faces to reel in its runaway debt, now totaling almost $14 trillion.

Two of the toughest choices involve Social Security and Medicare, programs that have long been considered so untouchable that they're known as the third rail of American politics.

So what are the facts on how the deficit can actually be reduced? On Wednesday, ABC News spoke to economists who have advised both Republican and Democratic presidents, asking whether it's possible to reduce the deficit without touching those big-ticket items.

When it comes to Social Security, the commission recommends slowly raising the retirement age from 66 to 69 by the year 2075. Commission members would also reduce benefits from the program.

As unpopular as that might seem, is there a way to avoid changes to Social Security and still fix the deficit?

"No," said Gregory Mankiw, the former chairman of President Bush's Council of Economic Advisors. "Social Security is part of the problem and it has to be addressed."

Mankiw believes that the commission's bipartisan proposal makes sense, and so does Jeff Frankel, who held the same chairmanship during the Clinton Administration.

Economists say that you have to look at the pie chart showing the nation's spending. Social Security consumes some 20 percent of the federal budget, and Medicare takes a bite nearly as big.

Experts told us there's simply no way to rein in the deficit without touching Medicare. The panel's tough guidelines call for a freeze on Medicare payments to doctors through 2020.

"Medicare is part of the problem, an even bigger part of the problem than Social Security," said Mankiw, pointing out the aging baby boomers who will cause healthcare spending to skyrocket in coming years.

Clinton's advisor, Frankel, was again in agreement.

"We have no choice," he said.

Lastly, there's the issue of defense spending. It accounts for roughly 20 percent of the federal budget and has long been considered untouchable by many. But according to our economists from both sides, it must be cut to reduce the overall deficit.

The panel's suggestions may be tough, but according to these men who served Bush and Clinton, they're the only only option.

Copyright 2010 ABC News Radio´╗┐

Thursday
Nov112010

Obama on Debt: "We're Going to Have to Make Some Tough Choices"

Photo Courtesy - Getty Images(SEOUL, South Korea) -- President Obama refrained on Thursday from addressing specific proposals put forward by his presidential Debt Commission to reduce the debt, but he called on politicians to hold their fire and work in a bipartisan way to solve the momentous problem of the nation’s $13.7 trillion debt.

“I have not seen the final report from the Deficit Commission,” the president said at a joint appearance with South Korean President Lee Myung-bak, after a reporter asked him for reaction.  “I have said very clearly until I see the final report that I will not comment on it because I want them to have the space to do their work.  They are still in negotiations.”

Obama pointed out that the two co-chairs of the Commission -- former Clinton White House chief of staff Erskine Bowles and former Wyoming Sen. Alan Simpson -- are trying to secure 14 out of 18 Senate Finance Committee votes for their recommendations to go forward, “and I want to make sure they’ve got the room and the space to do so,” the president said.

The draft report by the co-chairs presents some painful and politically unpalatable recommendations -- not merely $2 trillion in spending cuts and $1 trillion in tax increases over the next decade, but also means-testing Social Security, raising the retirement age to 69, expanding the payroll tax, closing one third of overseas U.S. military bases and raising the gasoline tax.

There is something in the proposal to offend everyone, whether doctor -- reducing Medicare fees for doctors); lawyer -- enacting tort reform to “reduce the cost of defensive medicine”; or Indian chief -- ending payments to Native American tribes for abandoned mines.

The president said he convened the commission “precisely because I am prepared to make some tough decisions” but noted that he “can’t make them alone.”

 “I need Congress to work with me,” Obama said. “We’re going to have to make some tough choices. The only way to make those tough choices historically has been if both parties are willing to move forward together.”´╗┐

Copyright 2010 ABC News Radio







ABC News Radio