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Hoyer: White House likely to name deficit panel

January 19, 2010

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WASHINGTON—President Barack Obama is likely to name a special commission to come up with a plan to curb the spiraling budget deficit under an agreement forged with top Capitol Hill Democrats.

No. 2 House Democrat Steny Hoyer of Maryland predicts Obama would name the deficit panel by a presidential order and that Congress would at the same time strengthen so-called pay-as-you-go budget rules designed to make it more difficult to pass legislation that would increase the deficit.

The twin developments come as the Senate is about to take up a bill to permit the federal government to issue the bonds required to fund government programs and prevent a first-ever default on obligations. Budget hawks have held the measure hostage seeking the anti-deficit steps.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

WASHINGTON (AP) -- Democratic infighting over demands by moderates to turn over some of Congress' decision-making power on taxes and spending programs to a special deficit commission is complicating prospects for a must-pass borrowing bill headed for the Senate floor.

The legislative minuet is blending brinksmanship with hard bargaining as the White House summoned top House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid for a meeting Tuesday to try to figure out how to pass legislation to permit the federal government to issue the bonds required to fund government programs and prevent a first-ever default on obligations.

Moving to increase the so-called debt limit is a major source of anxiety for Democrats, and moderates in both House and Senate have responded with demands for action on the deficit as a condition of voting for it. The debt limit legislation -- likely to exceed $1 trillion -- could come to the floor as early as Wednesday.

Senators such as Budget Committee Chairman Kent Conrad, D-N.D., want to create a bipartisan deficit commission whose findings would be awarded a mandatory up-or-down vote after this year's election. They're using their votes to increase the debt limit as leverage to win a separate vote on the plan.

Conrad's deficit commission plan, however, appears to be sinking after assaults from interest groups on both right and left. Conservatives worry about their ability to stop tax hikes; liberal groups fret they wouldn't be able to block cuts to Medicare and Social Security.

Senate Minority Leader Mitch McConnell, R-Ky. -- who had endorsed Conrad's bill -- has now lined up against it.

As a fallback, the administration and its allies on Capitol Hill are working to devise an alternative in which President Barack Obama would create a commission and name its members.

Vice President Joe Biden was to preside Tuesday's talks with Pelosi, D-Calif., Reid, D-Nev., and others to try to make progress. The White House, once cool to the idea of a deficit commission, now seems behind it.

Conrad and allies like Evan Bayh, D-Ind., are amenable to compromise, so long as the plan issued by an Obama-named commission gets a guaranteed vote in Congress. That can't be forced by a presidential order.

The real item of contention is whether a plan coming from the president's commission would automatically get a vote, House Majority Leader Steny Hoyer, D-Md., said Tuesday. He said talks are focused on finding a way to guarantee a vote.

The impasse could mean trouble for Democrat's hopes to pass a borrowing bill large enough so that they won't have to vote to again to raise the debt limit before Election Day.

Republican supporters of a bipartisan deficit commission such as Sen. Judd Gregg of New Hampshire and George Voinovich of Ohio, concur with Conrad that the idea is the best way to get policymakers in both parties to put aside politics and agree to the politically difficult spending cuts and tax hikes required to close intractable budget deficits that could exceed $1 trillion for the rest of the decade.

Pelosi, whose power would be greatly eclipsed by a commission, opposes the idea but has been forced into the talks because the debt-limit measure simply has to pass to avoid a market-rattling default on U.S. obligations.

Voinovich, who met with the president Tuesday on the idea, said Obama supports Conrad's idea of a guaranteed vote on a commission's findings but sees too much political opposition.

Voinovich and Gregg, however, aren't optimistic that a commission named by Obama would be very successful.

"If he doesn't get some kind of a consensus on a commission, then he's going to have to move forward to do something as an alternative that will address the problem that I believe would not be as successful as if we could do it on a bipartisan basis," Voinovich said.

The Senate cleared a $290 billion increase in the debt limit -- to $12.4 trillion -- on Christmas Eve, but only as a stopgap measure to extend the deadline for talks on a long-term measure.