New Tax Increases Must be 'On Table’ to Cut Deficit, Says Former GOP Senate Budget Chief

By Matt Cover | January 25, 2010 | 6:54 PM EST

former Sen. Pete Domenici (R-N.M.)

( – Former Sen. Pete Domenici (R-N.M.) said new taxes must be part of any proposal to deal with the nation’s impending debt crisis. He stressed that while the problem is driven mainly by ballooning entitlement spending, tax increases are necessary to attract Democratic support.
To reduce the deficit, “you’ve got to put entitlements on the table, and if you do, you’ve got to put taxes on the table,” Domenici, a former chairman of the Senate Budget Committee, said while announcing the creation of the Bipartisan Policy Center’s Debt Reduction Task Force in Washington, D.C., on Monday.
The new policy project aims to “develop a viable plan to reduce projected federal budget deficits and place our nation on a sustainable fiscal path,” the center said in a press release. Domenici co-chairs the task force with former Office of Management and Budget Director Alice Rivlin.
“It’s clear to this senator,” Domenici said, “that the problem is so big that you can measure the amount of deficit reduction you’re going to have to get.
“And if you want it to be bipartisan, since it is an American debt – it doesn’t belong to Republicans or Democrats – it belongs to Americans. It was incurred by Americans for Americans, if you want that, you’ve got to put entitlements on the table, and if you do, you’ve got to put taxes on the table,” he said.
“I’m sorry that some Republicans think otherwise, but I was there [in the Senate] a long time, and I don’t think you can do spending [cuts] alone and then come back and fill in what you didn’t do. It’s got to be a package, and – to my way of thinking – it’s got to have taxes on the table so you can look at it and see how it fits,” said Domenici.
Rivlin, who served as the OMB director under President Clinton in 1994-96, added that a spending-only approach would never garner enough Democratic support to stand a chance of passage, explaining that if you want both parties, you must include both issues: taxes and spending.
“This [so-called] spending commission, if it existed, would not have the support of the Democrats,” she said. “If you want both parties there, you’ve got to have both pieces on the table.”
When questioned about how to achieve what has historically proven to be an elusive bipartisan consensus, especially when attacking two political sacred cows – taxes and entitlements – Domenici said he did not see any alternative, arguing that both issues must be considered.
“I haven’t seen anything that tells me that we can fix the budget, fix this problem right there. I haven’t seen anything that says we can fix this and leave taxes off the table,” said Domenici, who served six terms in the Senate (leaving in January 2009).
“I haven’t found that there’s enough growth possible. We can grow, and we should grow, and we pray to God that we get back on the growth side and start going, but we can’t get enough growth to take care of this problem,” he added.
“So what are you going to do, you going to leave it half-solved? Are you going to take half solutions? I don’t think so,” he said. asked Domenici if he would consider a freeze on federal spending as part of his “all in” approach to solving the government’s fiscal problems. He responded that while a spending freeze might be worth consideration, it would not amount to much without some way to stop the runaway growth in entitlement spending.
“The first thing I think we’re going to tell our members and try to prove and get out to the public is it’s not the discretionary accounts of our government that is creating this tsunami,” he said.
“So a freeze only affects discretionary spending [and] you have to look at more than that to get where you’re going. I’d be for restraining those, whether it be a freeze or otherwise, but you’ve got to go right over it and say, ‘What else?’ and look at the enormous array of entitlements,” Domenici added.
Rivlin had a similar answer, saying that a spending freeze would have little effect without curbing the growth in entitlements such as Medicare, Medicaid, and Social Security.
“If you’re talking about discretionary spending, it isn’t a big part of the problem,” Rivlin told “Because it’s small, and it is not automatically growing.”
Rivlin added that entitlements must be dealt with if the country is to return to fiscal sanity.
“Discretionary spending is not a rising portion of the economy – entitlements are,” she said. “That doesn’t mean discretionary spending isn’t important, and it doesn’t mean we can’t have any savings there, but it’s not driving the long-run deficits. It’s Medicare, Medicaid, and Social Security rising faster than taxes grow at any set of tax rates.”
The federal budget deficit was $1.42 trillion for the financial year that ended in September, which is three times the deficit of 2008 ($459 billion). Over the next 10 years, according to the Congressional Budget Office, the federal deficit is expected to total $9.1 trillion. In addition to the federal deficit spending, the total national debt of the United States is $12.3 trillion.