UPDATE 1-Romney, Obama both like deficit-cutting plan, to a point

(Updates with fresh comments throughout)

By Kim Dixon

WASHINGTON, Oct 4 (Reuters) - President Barack Obama and Republican challenger Mitt Romney praised the deficit-cutting framework known as Simpson-Bowles in their debate on Wednesday, but neither candidate has embraced the politically unpopular choices put forward in the plan.

A bipartisan presidential commission - named after its chairmen, Republican Alan Simpson and Democrat Erskine Bowles - proposed in 2010 a combination of spending cuts and tax increases to reduce the federal debt.

Obama and Romney touted the panel's report as a model at the Denver debate, and Romney blasted Obama for not fully embracing the proposal, which seeks to pare a federal budget deficit that has topped $1 trillion in recent years.

"The president should have grabbed that," Romney said during the debate, which was dominated by economic issues.

After the panel unveiled its plan, Obama praised its work but did not adopt its specifics. Republican panel member Paul Ryan, chairman of the House of Representatives budget committee and Romney's vice presidential pick, opposed the commission's plan.

The plan called for about $3 in spending cuts for every $1 in new revenue to achieve its goals.

Romney, despite expressing support for the plan, said he would "absolutely" not back 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.

Even as the Simpson-Bowles plan has taken on new popularity, many experts say it is an easy crutch and that even with unpopular decisions, its math does not add up.

Longtime budget guru Stan Collender calls it a "laundry list of spending and revenue alternatives" that he likened to "budget candy, it is easy to like in theory."

Obama said his $4 trillion deficit reduction plan is based on Simpson-Bowles, but analysts might disagree.

"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 and disabled and the Social Security retirement program for the elderly. Simpson-Bowles takes aim at the costs of these programs, a reason some Democrats on the commission voted against it.

The Simpson-Bowles plan also calls for tax rate cuts for all income groups, while Obama has called for raising rates for the richest Americans. The plan proposes 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.

Obama and Romney have both promised not to cut taxes on the middle class. Critics say that position ties both candidates' hands - that there is not enough money available from the wealthy alone to deal with the deficits the country faces.

(Additional Reporting by Patrick Temple-West; Editing by Alistair Bell and Will Dunham)


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