By Donna Smith
WASHINGTON, July 28 (Reuters) - A U.S. presidential commission charged with cutting the budget deficit on Wednesday discussed the politically charged issue of scrapping or changing tax breaks that cost about $1 trillion a year.
Senate Budget Committee Chairman Kent Conrad suggested ending some of the tax breaks as part of a broader effort to streamline the U.S. tax code to make the economy more competitive globally and generate revenues without raising tax rates.
'We have a tax system that really does not fit the circumstances we confront today, either in terms of generating revenue that is necessary or contributing to the competitive position that is absolutely critical for the country going forward,' Conrad, a Democrat, said at a meeting of the 18-member commission.
Erskine Bowles, a Democrat and co-chairman of the commission, agreed the panel should look at tax expenditures as part of its recommendations to reduce the budget deficit, which is expected to top $1.4 trillion this year.
Bowles last month suggested a cap on government spending, raising hopes that Democrats and Republicans on the panel will be able to present a comprehensive plan when they give President Barack Obama recommendations in December.
So-called tax expenditures, such as the popular mortgage interest deduction, cost the federal treasury about about $1 trillion a year, according to tax experts. But doing away with tax breaks can be difficult. In the case of the mortgage interest deduction, eliminating it could politically damage anyone who backed such a proposal.
'Clearly (tax expenditures) is something we should look at. I don't think that alone will solve all of our problems,' said Dave Camp, the top Republican on the tax-writing Ways and Means Committee in the House of Representatives.
Representative Xavier Becerra, a Democrat, said mortgage interest deduction has worked to boost home ownership but suggested the commission could consider recommending limits on some of the tax breaks.
'There may be things we have to do with any number of these tax expenditures,' he said.
How to cut the deficit and the United States' debt of $13 trillion will be issues going into November's congressional elections.
BUSH TAX CUTS
The deficit commission has been criticized by conservatives as a political front for raising taxes and by liberal groups worried that the panel will recommend big cuts to the Social Security retirement program.
Although not directly related to the commission's work, tax cuts implemented by former President George W. Bush in 2001 and 2003 have become the focus of political disagreement in recent days. The White House wants to let some of the reduced tax rates for wealthier Americans run out at the end of the year. Republicans are pushing to extend all of the tax cuts.
Outgoing White House budget chief Peter Orszag said on Wednesday it would be 'foolish' to cut the deficit while growth was still frail but reckless not to significantly shrink the budget gap over the next five years.
Bowles defended the panel's efforts to address Social Security, a popular program that was signed into law 75 years ago on August 14, when the country was in the middle of the Great Depression.
'This commission wants to strengthen Social Security and we want to do it by ensuring that it's solvent for at least the next 75 years,' Bowles said.
Social Security faces increasing financial strains as the baby boom generation, about 78 million people born between 1946 and 1964, start to retire over the next decade.
(Reporting by Donna Smith; Editing by Kenneth Barry) Keywords: USA DEFICIT/COMMISSION (Donna.M.Smith@ThomsonReuters.com: 1 202-898-8300; Reuters Messaging: Donna.Smith.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
WASHINGTON, July 28 (Reuters) - A U.S. presidential commission charged with cutting the budget deficit on Wednesday discussed the politically charged issue of scrapping or changing tax breaks that cost about $1 trillion a year.
Senate Budget Committee Chairman Kent Conrad suggested ending some of the tax breaks as part of a broader effort to streamline the U.S. tax code to make the economy more competitive globally and generate revenues without raising tax rates.
'We have a tax system that really does not fit the circumstances we confront today, either in terms of generating revenue that is necessary or contributing to the competitive position that is absolutely critical for the country going forward,' Conrad, a Democrat, said at a meeting of the 18-member commission.
Erskine Bowles, a Democrat and co-chairman of the commission, agreed the panel should look at tax expenditures as part of its recommendations to reduce the budget deficit, which is expected to top $1.4 trillion this year.
Bowles last month suggested a cap on government spending, raising hopes that Democrats and Republicans on the panel will be able to present a comprehensive plan when they give President Barack Obama recommendations in December.
So-called tax expenditures, such as the popular mortgage interest deduction, cost the federal treasury about about $1 trillion a year, according to tax experts. But doing away with tax breaks can be difficult. In the case of the mortgage interest deduction, eliminating it could politically damage anyone who backed such a proposal.
'Clearly (tax expenditures) is something we should look at. I don't think that alone will solve all of our problems,' said Dave Camp, the top Republican on the tax-writing Ways and Means Committee in the House of Representatives.
Representative Xavier Becerra, a Democrat, said mortgage interest deduction has worked to boost home ownership but suggested the commission could consider recommending limits on some of the tax breaks.
'There may be things we have to do with any number of these tax expenditures,' he said.
How to cut the deficit and the United States' debt of $13 trillion will be issues going into November's congressional elections.
BUSH TAX CUTS
The deficit commission has been criticized by conservatives as a political front for raising taxes and by liberal groups worried that the panel will recommend big cuts to the Social Security retirement program.
Although not directly related to the commission's work, tax cuts implemented by former President George W. Bush in 2001 and 2003 have become the focus of political disagreement in recent days. The White House wants to let some of the reduced tax rates for wealthier Americans run out at the end of the year. Republicans are pushing to extend all of the tax cuts.
Outgoing White House budget chief Peter Orszag said on Wednesday it would be 'foolish' to cut the deficit while growth was still frail but reckless not to significantly shrink the budget gap over the next five years.
Bowles defended the panel's efforts to address Social Security, a popular program that was signed into law 75 years ago on August 14, when the country was in the middle of the Great Depression.
'This commission wants to strengthen Social Security and we want to do it by ensuring that it's solvent for at least the next 75 years,' Bowles said.
Social Security faces increasing financial strains as the baby boom generation, about 78 million people born between 1946 and 1964, start to retire over the next decade.
(Reporting by Donna Smith; Editing by Kenneth Barry) Keywords: USA DEFICIT/COMMISSION (Donna.M.Smith@ThomsonReuters.com: 1 202-898-8300; Reuters Messaging: Donna.Smith.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.