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Private panel urges shake-up in budget process

By Kevin Drawbaugh

WASHINGTON (Reuters) - A private panel called for a shake-up of the U.S. government's budget process that would set clear targets for cutting red ink and impose spending cuts and even tax increases if targets were missed.

The recommendation by the Peterson-Pew Commission on Budget Reform, a balanced-budget advocacy group that has no official government role, came as a separate presidential deficit commission met behind closed doors.

The Peterson-Pew Commission, which also called for slashing the federal deficit, recommended that the president and Congress be required to respect targets for cutting red ink and that serious consequences be levied for falling short.

If a budget enacted by Congress missed a target, the president could propose cuts to bring it in line, the Peterson-Pew Commission recommended.

"If the target were still missed, spending reductions and tax increases would be imposed through automatic trigger mechanisms," the Peterson-Pew Commission said.

The report from Peterson-Pew -- one of a handful of panels studying the deficit problem -- comes days after an election that swept Republicans to power in the House of Representatives partly on a wave of voter outrage over the $1.3 trillion deficit and the national debt of more than $13.6 trillion.

President Barack Obama has appointed his own commission to tackle the issue. It convened on Wednesday in a private session. Members and analysts remained skeptical that the 18-member group will produce a big breakthrough.

The presidential commission has held five public meetings this year. A sixth had been set for Wednesday but was postponed until later in the month. Closed-door meetings have occurred regularly.

Democrats are resisting spending cuts, while Republicans, emboldened by the election results, are likely to keep refusing to consider tax hikes, according to commission members.

Most budget analysts agree that some mix of both is needed to tackle the huge problem, but the members of Obama's commission are still far from agreeing on concrete proposals. Aides said it was unlikely the presidential commission would come to consensus by the time their final report is due on December 1.

"Hopes are high, but expectations are still low," said one aide to a member of the commission.

The Peterson-Pew panel -- a joint effort of the Peterson Foundation, the Pew Charitable Trusts and the Committee for a Responsible Federal Budget -- in 2009 recommended that the government commit to stabilizing the debt at 60 percent of gross domestic product by 2018 and develop plans to attain that goal to be phased in 2012. Its second report calls for a debt target and annual spending targets, directions to congressional committees to adhere to them, and putting senior House and Senate leaders on Congress' budget committees.

Discipline would come from strengthened spending caps, giving the president the power propose cuts, and automatic triggers if all else fails.

"Although process alone cannot fix the problem, we believe these reforms will encourage more fiscally responsible policies and keep them on track," said the report.

(Additional reporting by Andy Sullivan and Donna Smith; Editing by Leslie Adler)

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