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January 19,
2011
Biden's New
Chief of Staff Talks Deficit
Bruce Reed is
set to begin his new job as Chief of Staff to Vice President Joe
Biden on Friday. This morning Reed addressed
representatives of companies and non-profit associations about the
deficit and the likelihood of congressional action thereon.
In his previous position, Reed served as the Executive Director of
President Obama's Deficit Commission,
which put forth a number of controversial proposals shortly after the
elections to address the ballooning deficit.
Reed indicated that many of the commission members were surprised
by group's productivity -- "after the first month when the
talking points had worn off."
Of the 18 commission members, 12 are current Members of
Congress. And while half of those elected officials supported
the Commission's final product, Reed could not say with
certainty that the 112th Congress would make a serious effort to
solve the $14 trillion deficit. However, he is confident that
circumstances will force Congress to deal with the issue within the
next five years.
The most popular topics amongst those attending included tax and
health reform, as well as defense spending. On taxes, Reed said
there was a consensus on the need for tax reform. The
Commission determined that U.S. rates are about as twice as high as
they need to be given that the federal government collects $1 trillion
annually in income taxes but leaves $1.1 trillion on the table due to
the wide array of exemptions and deductions that constitute the
current system.
According to Reed, commission members also discussed lowering the
corporate rate to bring it in line with the top income rate, which
they also discussed lowering from 35 percent to between 25 to 28
percent.
Responding to questions about defense spending, Reed told a joke he'd
heard recently: "The Department of Defense (DOD) is a benefits
company that occasionally kills a terrorist," making reference
to the popular TRICARE military health plan
that features a $400 annual premium with no deductibles. He
also said that Republicans were stunned to learn from defense
analysts that DOD's best estimate for the number of contractors it
uses is between 1 million and 9 million.
Of all the contentious issues the Commission discussed (Social
Security reform, entitlement spending, defense spending, taxes,
etc.), Reed said that the only issue that really divided the
Commission was health care reform.
The Commission's recommendations received 11 yeas and 7 nays.
14 yeas would have resulted in an official report by the Commission,
but would have done nothing to force action on the issue. In
the wake of that failed vote, some commission members are using their
platforms to continue the debate.
Commission Member and House Ways and Means Chairman Dave Camp (R-MI)
has already scheduled a hearing
for tomorrow on tax reform and Committee Member and House Budget
Chairman Paul Ryan (R-WI) told the Commission that he intends to push
for 80 percent of the Commission's proposals despite having voted
against it's recommendations in December.
If you have any questions concerning these issues,
please contact Chris Wagner at 202.772.0924 or cwagner@clarkhill.com.
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