Key Player on Debt Commission Says VAT in the Mix

The Executive Director of the White House panel charged with reducing the national debt told Fox Wednesday a value-added-tax or VAT would be among the options up for consideration.

"We need to talk through all sides of this equation," Bruce Reed told Fox in an interview in his makeshift office two blocks from Capitol Hill. "We're going to look at discretionary spending, mandatory spending, tax reform...look at this issue from every angle. And also look at ways and making sure that the economy is strong and it's growing faster than debt is growing."

When asked again about the raging debate in Washington think tanks over a VAT - a variation of a national sales tax that would hit the rich, middle class and poor - Reed said the 18-member commission could not afford to rule any idea.

"I don't want to get ahead of the commission, they haven't even had their first meeting." Reed said. " We intend to look at everything. But I don't know which issues they'll warm to and which ones they won't. It's important for everybody to come it recognizing the scale of the problem. If we're facing a gap between what the government is taking in and what the government is shelling out of 5 or 6 percent of GDP (Gross Domestic Product) over the long haul, that's not sustainable. That means the debt is growing twice as fast as the economy and you cant get away with that for long."

Additionally, in an interview with CNBC, President Obama did not flatly rule out a VAT tax in the future, calling the levy a "novel" idea that had worked in other countries. Obama said he would prefer to focus first on reducing spending and said his strong preference is to sheild the middle class from tax increases.

"I know that there's been a lot of talk around town lately about the value added tax," Obama told CNBC. "That is something that has worked for some countries, it's something that would be novel for the United States. Before, you know, I start saying 'this makes sense or that makes sense,' I want to get a better picture of what our options are. My first priority is to figbure out how can we reduce wasteful spending so that, you know, we have a baseline of the core services that we need and the government should provide. And then we decide how do we pay for that as opposed to figuring out how much money can we raise and then not having to make tough choices on the spending side."

Reed will run a 12-member bipartisan staff that will support the commission's work. The commission, led by former Wyoming Republican Sen. Alan Simpson and former Clinton White House Chief of Staff Erskine Bowles, holds its first meeting Monday.

Even so, the commission doesn't have a seal or etched plaque on its door. There's no stationary, no business cards and Reed takes all his own calls - at least for now. But as Reed, 50, the ever-cheerful former head of the centrist Democratic Leadership Council said: "Hey, I've got the president. I've got the Federal Reserve Chairman."

President Obama will have the commission members to the White House on Monday and deliver remarks about the importance of its mission. Federal Reserve Chairman Ben Bernanke will be one of the commission's first witnesses later that day. Bernanke has recently warned Congress the national debt, currently $14 trillion, could rise to $20 trillion by 2020 and carry a debt service load to taxpayers of $1 trillion per year.

"We have to have answers that are on the same scale as the problem," Reed said.

The commission will meet once a month and must file its recommendations by Dec. 1. The commission (10 Democrats and 8 Republicans) cannot approve a recommendation unless 14 of its 18 members agree.

"Having a filibuster-proof majority of 60 percent wasn't good enough," Reed cracked. "We have to have a 78 percent majority."

Reed tartly observed that's even higher than the Senate requires to approve an arms control or trade treaty.

For this and many other reasons, skepticism runs deep in Washington that even if the commission agrees on a set of recommendations, Abeam and Congress will look the other way. Reed predicted just the opposite.

"This commission isn't designed to produce a report that's going to sit on a shelf some where. The American people are ahead of politicians on this issue."

The former head of domestic policy in the Clinton White House, Reed said the commission can only succeed if all members remove their ideological "blinkers."

"This is a practical mathematical problem, not an ideological one," Reed said. "Over the long haul, we need to make sure that we don't get swamped by debt. I think conservatives should believe that, progressives should believe that. It's bad for both of them if we fail. Both sides need to come to this debate with an open mind."

Reed marched up to Capitol Hill last week to meet with lawmakers on the commission, co-chairs Simpson and Bowles in tow.

"The members of this commission are smart, eager, enthusiastic, and full of good will," Reed said. "They are glad to be doing this and they share a common concern about the long term fiscal challenge and a real desire to take it on."

Look for video of the Reed interview with Fox Senior White House Correspondent Major Garrett later today