Washington (CNN) - In a dramatic concession to senior Democratic and Republican lawmakers, President Obama abruptly shifted his position Saturday and declared his public support for creating a fiscal commission that could propose sweeping tax increases and spending cuts to try to slash the soaring federal debt.
The White House released an unexpected written statement from Obama saying he now backs putting together a powerful commission created through a federal statute, a reversal from earlier this week when Vice President Joe Biden signaled in a private meeting with Sen. Kent Conrad, D-N.Dakota, and other key lawmakers that the administration would only support a weaker version of the commission by forming it through an executive order.
"The only way to solve our long-term fiscal challenges is to solve it together – Democrats and Republicans," Obama said in the written statement. "That's why I strongly support legislation currently under consideration to create a bipartisan, fiscal commission to come up with a set of solutions to tackle our nation's fiscal challenges – and call on Senators from both parties to vote for the creation of a statutory, bipartisan fiscal commission."
Conrad applauded Obama's decision in a written statement.
"The president is demonstrating exactly the kind of leadership we need to tackle our nation's long-term fiscal challenges," Conrad said. "His support shows that he is determined to do what is necessary to put us back on a sound long-term course."
A senior Senate source familiar with Biden's meeting last week with Conrad and other key senators suggested the administration's reversal came because lawmakers were adamant that they would not support an increase in the debt ceiling unless the administration supported the full-scale statutory fiscal commission as called for in the Conrad-Gregg proposal.
An increase in the nation's debt ceiling is coming up for a vote in the Senate on Tuesday, and there has been fear that failing to lift the amount of money the U.S. can borrow might further rattle the financial markets.
Conrad and the other Senators insisted to Biden that Obama had to support enactment of the statutory commission if he wanted to pass the debt ceiling increase, according to the senior Senate source familiar with the discussions, and that creating the commission through an executive order was not credible. A second Senate aide added that the upcoming debt ceiling vote, coupled with pressure from Tuesday's special election in Massachusetts, helped tip the administration.
It's still unclear whether the legislation sponsored by Conrad and Sen. Judd Gregg, R-New Hampshire, will pass on Tuesday. The senior Democratic aide said Obama's support will help bring along Democrats, but it's uncertain whether the bill will get the 60 votes needed to overcome a possible filibuster.
The Conrad-Gregg legislation would create a commission with 10 Democrats (eight members of Congress and two Obama officials) and eight Republicans (all from the House and Senate). It would have several months in 2010 to study the problem and then vote after the midterm elections on a reform package that could include dramatic tax hikes and spending cuts. If 14 of the 18 members approve the package, giving it a bipartisan nod, it would force an automatic up-or-down vote in the House and Senate on whether to implement the recommendations.
Such recommendations could include cuts to popular programs like Social Security and Medicare, which is why some liberals are opposed to formation of the commission; or proposals to drastically raise taxes to make up for budget shortfalls, which is why some conservatives have blasted the idea.
CNN first reported in December that Obama was privately giving serious thought to setting up such a commission, and that there was division within the administration about whether to give the panel real teeth by creating it with a federal statute or give it less power by forming it through an executive order that would not require up-or-down votes in Congress on the potentially explosive recommendations.
While some critics charge a commission would be a cop-out because it would punt Congressional decisions to an outside panel, the Senators pushing the plan believe the current system is broken and it will take a new mechanism to enact the wrenching changes that will be needed to get the budget back into balance.
"Our statutory task force proposal provides the best chance for developing a truly bipartisan solution to this problem," Conrad said in his statement. "No one political party can solve this on its own. We need both sides of the aisle committed to working together to confront the threat of runaway debt."
But Obama hinted at the partisan divide such a commission would face in his statement, which began by blaming the current situation squarely on the Bush administration.
"The serious fiscal situation that our country faces reflects not only the severe economic downturn we inherited, but also years of failing to pay for new policies – including a new entitlement program and large tax cuts that mostly benefited the well-off and well-connected," Obama said. "The result was that the surpluses projected at the beginning of the last administration were transformed into trillions of dollars in deficits that threaten future job creation and economic growth."