Greenspan, CBO Chief Air Deficit Views; Each Says Cut Needed, The Methods Diverge
Federal Reserve Board Chairman Alan Greenspan and Congressional Budget Office Director Robert D. Reischauer told the president's entitlement reform commission yesterday that immediate action is needed to head off serious long-term deficit problems, but they differed significantly on how to proceed.</br></br>Greenspan insisted that "increasing the tax base or tax rates cannot solve this problem" and that "there is no alternative" to scaling back the growth of federal spending, including major entitlement programs such as Social Security and Medicare.</br></br>Reischauer, who heads the budget analysis arm of Congress, argued that a combination of spending reductions and tax increases would be a more practical and politically acceptable way of gradually achieving further deficit reduction. "I don't think you're going to resolve this issue without dipping into both of those pots," he said. "To think it can all be done on the spending side is unrealistic."</br></br>Yesterday's conflicting testimony highlighted one of the more nettlesome issues confronting the Bipartisan Commission on Entitlement and Tax Reform as it searches for a consensus on a plan for controlling entitlement programs and forestalling massive deficit problems early in the next century.</br></br>Sens. Bob Kerrey (D-Neb.) and John C. Danforth (R-Mo.), chairman and vice chairman of the 32-member panel, have said that it may be impossible to win majority support for a plan that includes a tax increase. Rep. Bill Archer (R-Tex.), speaking for the panel's conservatives, has vowed to fight any plan that included either a tax increase or the elimination of tax subsidies, such as the tax deduction for mortgage interest.