Senate rejects proposed budget-deficit panel

WASHINGTON — The Senate rejected Tuesday a proposal to establish a potentially powerful commission to reduce the federal budget deficit, despite President Obama's endorsement and swelling voter anger about government spending and debt.

The bipartisan amendment would have required Congress to accept or reject the commission's recommendations without making changes, a provision designed to prevent lawmakers from sidestepping the most politically risky proposals.

The vote came just hours after the Congressional Budget Office issued a report predicting that the 2010 budget deficit would come in at $1.35 trillion, a slight improvement from $1.4 trillion in 2009 but still higher as a share of the economy than any other year since World War II.

Political pressure to rein in federal spending has intensified after the Democratic Party's loss in a special election for Senate in Massachusetts last week, which many analysts interpreted as the result of voter frustration at the rise in federal spending and debt in recent years.

Putting the brakes on

Against that backdrop, the White House said Monday that it would try to put the brake on deficits by imposing a three-year freeze on government spending.

Obama is also likely to tell Congress in his State of the Union address Wednesday that he will freeze the salaries of his top White House aides and of appointees across the government, according to a senior administration official.

The New York Times reported that Obama is to announce Wednesday that he will establish a deficit-reduction commission by executive order. Critics say a presidentially created panel would be toothless because it could not force action by Congress.

Even as Democrats scramble to show their commitment to deficit reduction, they are contemplating major new spending initiatives. Those include legislation to spur job creation, a health-care overhaul and a long-delayed effort to increase Medicare fees for doctors.

Proponents of the rejected deficit commission argue that the nation's fiscal problems have gotten large that Congress is unable to handle them. According to the new Congressional Budget Office report, the government now is on course to double the national debt in five years and to triple it in a decade.

"Is there any doubt that we are on a collision course with economic reality?" asked Senate Budget Chairman Kent Conrad, D-N.D., sponsor of the deficit-commission proposal.

Bipartisanship

The Senate vote was 53-46, seven short of the 60 votes needed to approve the amendment. The vote was a rare display of bipartisanship: voting for the amendment were 36 Democrats, 16 Republicans and one independent. The opposition was a coalition of Republicans who worried that the panel would give new impetus to tax hikes, and Democrats concerned that it would force cuts on prized spending programs like Medicare.

The commission would have been made up of eight Democratic members of Congress, eight Republicans and two administration officials.

The panel was proposed as an amendment to legislation that would increase the ceiling on federal borrowing by $1.9 trillion, to $14.3 trillion. The larger ceiling, Democrats hope, would be high enough that they would not have to raise it again until after the 2010 elections.

Stimulus bill

to be more costly

WASHINGTON — Last year's $787 billion economic-stimulus bill is going to be even more expensive — $75 billion more, the Congressional Budget Office said Tuesday in its analysis of the costs of the mixture of tax cuts and spending allocated by Congress to jump-start the economy.

Almost half of the additional cost, $34 billion, is because the food-stamp program won't be able to take advantage of lower-than-expected inflation rates and will instead have benefits set by the stimulus bill.

Higher unemployment-insurance costs added $21 billion to the bill, and stimulus-subsidized bonds to pay for infrastructure projects have proved more popular than expected with state and local governments. Democrats say the beleaguered stimulus measure has produced up to 2 million jobs.

The nonpartisan CBO said five programs were responsible for most of the $112 billion in stimulus spending between last February and October: Medicaid; a $250 payment to almost 53 million Social Security recipients; Pell Grants; and fiscal relief for state governments. Tax cuts added $88 billion.

The stimulus is expected to add about $400 billion to the deficit in this budget year.

Democrats are pressing for another stimulus measure and top Senate Democrats have drafted an $82.5 billion jobs plan that would help small businesses, boost spending on road construction and mass transit, and give local governments money to retain teachers.