the Senate on Tuesday rejected a plan to create a bipartisan commission to tackle the nation's budget problems this year, leaving it up to President Obama to create such a panel by executive order.
The commission would have had broad powers to recommend changes to the tax code and cut spending on entitlement programs such as Social Security, Medicaid and Medicare. Its recommendations, due after the November elections, would have been guaranteed an up-or-down vote in both chambers of Congress before the year is out.
But the measure won just 53 votes in the Senate, not enough to overcome a threatened filibuster. In rejecting the idea, Republicans opposed to tax increases joined Democrats fearful of being forced to cut social programs.
The vote came as the nonpartisan Congressional Budget Office released its latest deficit projections, forecasting that continued spending to combat last year's recession and a muted recovery would drive this year's deficit to $1.35 trillion, a slight improvement over previous projections but still one of the deepest budget holes since the end of World War II.
The commission proposal was offered as an amendment to a Democratic plan to increase the nation's legal debt limit by $1.9 trillion, enough new borrowing to cover the government's bills through the end of the year.
Several conservative Democrats have threatened to vote against such a huge increase in the debt limit without a plan to lead the nation back to balanced budgets, and it was unclear Tuesday whether the president's promise to create a budget task force by executive order would be enough to satisfy them. Republicans have warned that they would not participate in a panel created by Obama, which would lack the legal authority to force action in Congress.
One of the protesters, Sen. Evan Bayh (D-Ind.), said he remained undecided Tuesday on the question of raising the debt limit, though he spoke favorably of creating a commission by executive order.
The Senate might have another chance to vote on the idea Tuesday or later this week. Aides to Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, said he has offered another amendment to the debt limit bill that would create a commission similar to the one rejected Tuesday but would give lawmakers the chance to change its recommendations.
In its January budget outlook, the CBO projected that future deficits will also improve slightly, falling to $480 billion in 2015, compared with the $560 billion projected last year. However, even this more optimistic forecast would require heavy borrowing by the Treasury Department to cover persistent budget shortfalls, driving the national debt to 67 percent of the overall economy by 2020.
And the numbers, the CBO noted, are likely to get substantially worse.
This year's deficit -- which is only slightly lower than the $1.4 trillion the government racked up last year -- would continue to expand if Congress approves additional spending this year. The House, for example, has already approved a jobs measure costing more than $150 billion, and the Senate is considering a package of tax cuts and social safety net programs that would cost more than $80 billion.
Moreover, the CBO's forecast is based on current law, which means it assumes that the Bush tax cuts will expire on schedule this year, that the alternative minimum tax will expand to ensnare millions of additional taxpayers and that doctors who serve Medicare patients will be hit with a big cut in payments. Obama and congressional Democrats have made clear that they do not intend to permit any of these things to happen, and that they do not plan to replace the lost cash.
Under that more realistic scenario, the CBO reports, deficits would dip slightly in the coming years but climb again by 2020 into the same dangerous territory where they are today. The CBO projects that the resulting national debt would climb to more than 100 percent of the overall economy by 2020, and that interest payments on the debt would skyrocket.
Even under its more optimistic assumptions, the CBO projects that interest payments on the debt will more than triple over the next decade, rising from $207 billion this year to $723 billion in 2020.
The report comes as Obama and congressional Democrats are placing a fresh emphasis on restraining deficit-spending. On Monday, the White House said Obama would propose a three-year freeze on discretionary spending unrelated to national security, a move that would save only about $15 billion next year but as much as $250 billion over the next decade.
And later Tuesday morning, the Senate is expected to vote on a proposal to create a bipartisan budget commission that would be given broad authority to change the tax code and spending on big entitlement programs such as Social Security, Medicare and Medicaid -- the main drivers of deficit spending in the coming years.
"CBO's new projections again highlight the fiscal mess handed to President Obama. A severe recession and the federal response to it, two costly wars, and the large unpaid-for tax cuts of the Bush era have left us in a deep hole of debt that will take years to dig out of," Senate Budget Committee Chairman Kent Conrad (D-N.D.), the chief advocate of the budget commission, said in a statement.
Tom Kahn, staff director for House Budget Committee chairman John Spratt (D-S.C.), added: "These projections are another reminder that as the economy recovers, it is critically important for us to address the long-term budgetary challenges our nation is facing."
Washington Post Staff Writer
Tuesday, January 26, 2010; 2:22 PM