RPT-Romney, Obama both like Simpson-Bowles plan, to a point

(Adds dropped word in paragraph 6)

By Kim Dixon

WASHINGTON, Oct 4 (Reuters) - Republican hopeful Mitt Romney and President Barack Obama praised the deficit-cutting plan known as Simpson-Bowles at their debate on Wednesday, but neither has made the politically painful choices put forward by that scheme.

Both candidates held up the 2010 deficit panel's report as a model at the first debate in Denver, and Romney blasted Obama for not fully embracing the proposal, which seeks to pare the deficit, which has topped $1 trillion in recent years.

"The president should have grabbed that," Romney said at the debate in Denver, dominated by talk of fixing the economy and sparing over tax policies.

The deficit panel was named after its chairman former Republican Senator Alan Simpson and Democratic economic adviser Erskine Bowles, and in 2010 came up with a proposal to slash federal deficits and lower tax rates.

But the commission failed to reach the required votes to trigger a congressional vote and Obama never fully backed it. The plan called for about $3 in spending cuts for every $1 in new revenue to achieve its goals.

Romney, though, said he would "absolutely" not support raising revenue as a way to reduce the deficit.

"Simpson-Bowles tried to get at the deficit reduction by a mixture of revenue increases and spending cuts and Romney's plan is all on the expenditure side," said Howard Chernick, an economics professor at Hunter College in New York.

Obama, for his part, said his $4 trillion deficit reduction plan was based on Simpson-Bowles, but analysts might disagree with that characterization.

"Obama is closer to Simpson-Bowles although he wouldn't save money by cuts in major entitlements," Chernick said. "Obama does not want to go there."

Social programs known as "entitlements" include the popular Medicare health insurance plan for the elderly.

The Simpson-Bowles proposal cuts tax rates substantially for all income groups, while Obama has called for boosting rates for the richest Americans.

Simpson-Bowles also calls for slashing many popular tax deductions and adding them back only selectively.

Neither candidate has gotten very specific about which of the nearly $1.1 trillion in annual special tax breaks they would hit to balance the budget. Among these are the mortgage interest deduction and the tax break for charitable giving.

"That is how the commission, the bipartisan commission that talked about how we should move forward, in a balanced way with some revenue and some spending cuts," Obama said.

(Editing by Alistair Bell and Eric Walsh)


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