UPDATE 4-U.S. deficit-cutting plan stumbles in uphill climb

* 10 lawmakers say will vote for Bowles-Simpson plan

* Four say will vote against, one leaning that way

* Analysts betting Bowles-Simpson can’t win 14 votes

* Plan seen as roadmap for Obama budget, deficit debate
(Adds Durbin support)

By Donna Smith and Kevin Drawbaugh

WASHINGTON, Dec 2 (BestGrowthStock) – A bold plan to slash the U.S.
budget deficit appeared on Thursday to be falling short of the
support needed from members of a presidential commission to
trigger congressional action.

But the plan had won more backing, from Democrats and
Republicans, than many expected in February when President
Barack Obama set up the commission with the task of finding
ways to cut the $1.3 trillion deficit and $13.8 trillion debt.

Although the plan drafted by panel co-chairmen Erskine
Bowles and Alan Simpson was unlikely to go to Congress, it will
likely provide an abundance of ideas that could frame the
politically explosive deficit debate in 2011 and 2012.

“The deficit isn’t going away and when Capitol Hill finally
wakes up to this sobering fact, they will have a roadmap in
front of them courtesy of Simpson and Bowles,” said Chris
Krueger, research analyst at financial firm MF Global.

Brian Gardner, policy analyst at investment firm Keefe
Bruyette & Woods, said, “We think it will be a baseline for
next year’s budget battles; we believe significant components
could find their way into the president’s budget to be released
in February as well as congressional budget proposals.”

With anxiety over government debt roiling markets in
Europe, U.S. lawmakers remain deeply divided over tax and
spending issues, as reflected within the commission, which was
expected to disband after its last meeting on Friday.

Assistant Senate Democratic leader Dick Durbin became the
10th member of the panel to embrace the plan, announcing his
support in an opinion piece for Friday’s Chicago Tribune.

“I will be voting yes,” Durbin declared. “It was not an
easy decision, and I know my vote will be criticized, but I
believe it is the right thing to do.”

Four commission members have said they will oppose it. One
said he was leaning toward a “no” vote. Four commission members
remain uncommitted. But analysts are betting the plan will not
gather the 14-vote majority needed for it to be sent to
Congress.

DEFICIT NEAR WORLD WAR TWO LEVELS

The Bowles-Simpson plan is coming at a time when the U.S.
budget deficit is the highest it has been since World War Two.

Polls show voters are deeply concerned, and they made that
clear in the 2010 congressional elections, when Republicans
scored enough victories to retake the House in 2011 and gain
seats in the Senate.

At the same time, a government debt crisis is rolling
through Europe — from Greece to Ireland — and raising
concerns about the credit-worthiness of larger nations.

The plan proposes a major tax code overhaul and deep
spending cuts to eventually balance the U.S. budget, reaching
every corner of the government and offending special interests
across the political spectrum.

Republicans have criticized the tax hikes the plan calls
for and said it does too little on cutting healthcare.
Democrats have slammed it as too harsh on Medicare and Social
Security, government programs for the elderly.

“Reducing our federal deficit is imperative, but we cannot
cut the deficit at the expense of veterans, seniors, ranchers,
farmers and hard-working families,” said Democratic Senator Max
Baucus, who said on Thursday he would oppose the plan.

Baucus chairs the Senate Finance Committee and is a
commission member. So is Republican Representative Dave Camp,
the front-runner to be the next chairman of the tax-writing
House Ways and Means Committee.

CAMP TO OPPOSE PLAN

Camp also vowed on Thursday to oppose the plan, saying tax
increases it proposed would impede economic growth. He also
said the proposal failed to address healthcare spending that he
said was the No. 1 driver of mounting U.S. debt.

The panel’s revised plan envisions reducing the budget
deficit to 2.3 percent of gross domestic product by 2015, from
8.9 percent in the last fiscal year — a figure bloated by
efforts to lift the U.S. economy out of its deepest recession
since the 1930s, Bush-era tax cuts and two costly wars.

To accomplish that goal, the plan urges deep cuts in
military and domestic programs starting in 2012, a 15 cent-a-
gallon hike in the gas tax and requiring Medicare participants
to pay more costs themselves. It also recommends raising the
age for receiving Social Security benefits.

The commission’s work came to a head amid a debate over
Bush-era tax cuts that greatly boosted the deficit. Extending
those cuts would drive the deficit higher. Obama has argued for
letting them lapse for families earning more than $250,000 a
year. Republicans say any lapse would harm the economy.
(Additional reporting by Andy Sullivan, Thomas Ferraro and Kim
Dixon; Editing by Peter Cooney)

UPDATE 4-U.S. deficit-cutting plan stumbles in uphill climb