'The Moment of Truth': President's Debt Commission Releases Final Report

VIDEO: David Muir reports on how the deficit can really be controlled.
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In a 59-page report released today entitled "The Moment of Truth," President Obama's federal-deficit commission outlined a sweeping plan to cut costs in an effort to nurse the country's ailing economy back to fiscal health.

The president had tasked commission co-chairmen Erskine Bowles and Alan Simpson with devising a plan to reduce the deficits and redirect the country from its "unsustainable" fiscal path. The end result is a wide-ranging and controversial report that its supporters touted as a good start to a tough problem.

But the plan may go nowhere because it needs the support of 14 of 18 panel members to get passed on to Congress. "Our challenge is clear and inescapable: America cannot be great if we go broke," Bowles and Simpson said in the report from the National Commission on Fiscal Responsibility and Reform.

After the country racked up a $1.3 trillion budget deficit last year and saw the national debt soar to $13.8 trillion, both Republicans and Democrats agreed that something had to be done; although there is widespread disagreement on what precisely that is.

To dig the country out of debt, the plan put forth by the panel today calls for drastic changes such as raising the Social Security retirement age, making cuts to Medicare and doubling the federal gas tax. It made only minor changes to the earlier draft released by Bowles and Simpson last month.

The plan, according to the panel, would achieve nearly $4 trillion in deficit reduction through 2020, more than any effort in the nation's history; reduce the deficit to 2.3 percent of Gross Domestic Product (GDP) by 2015; sharply reduce tax rates, abolish the Alternative Minimum Tax and cut backdoor spending in the tax code; cap revenue at 21 percent of GDP and get spending below 22 percent and eventually to 21 percent; ensure lasting Social Security solvency, prevent the projected 22 percent cuts to come in 2037, reduce elderly poverty and distribute the burden fairly; and stabilize debt by 2014, reducing it to 60 percent of GDP by 2023 and 40 percent by 2035.

"The era of debt denial and the denial of its consequences is over," Bowles said. "We have started an adult conversation that will dominate the debate until the elected leadership in Washington does something real."

Deficit Plan Unlikely to Reach Congress

Just how divisive that debate could be is highlighted by the fact that one panelist -- Rep. Jan Schakowsky, D-Ill., -- wasted no time in voicing her opposition to the report. Schakowsky said her opposition to the plan stems partly from her belief that Social Security is not a problem connected to the deficit.

A slew of other panelists, including the Senate's No. 2 Democrat, Dick Durbin of Illinois, and the top Republican on the House Budget Committee, Paul Ryan of Wisconsin, have yet to state how they will vote.

But the panel's plan did secure the support of two key senators: Kent Conrad of North Dakota and Judd Gregg of New Hampshire, the Democratic chairman and top Republican on the Senate Budget Committee, respectively.

"I think this commission has already been a success because it has put front and center before the American people how big this problem really is," Conrad said.

"Is there 14 votes? I don't know, but I will vote for it," Gregg said.

The key vote will come Friday but some analysts think it is a foregone conclusion that the report will fail to garner the 14 votes it needs.

"It is becoming increasingly clear that the Bowles-Simpson plan will not receive the required 14 votes to send the report to the president and Congress," said John Irons, research and policy director of the Economic Policy Institute, a think-tank in Washington.

"The rejection of the proposal should not be seen as a failure to take deficit reduction seriously, but rather that the policy approach adopted by the co-chairs is flawed. Most fundamentally, the report fails to fully acknowledge the current economic crisis. ...Despite paying lip-service to a payroll tax holiday, the plan includes no concrete, immediate action to create jobs or to spur economic growth in the near term."

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