WASHINGTON (Reuters) – Former Federal Reserve Chairman Alan Greenspan on Thursday endorsed a proposed bipartisan commission to help make the tough calls needed to get the spiraling and record U.S. debt under control.

Testifying before the Senate Homeland Security Committee, Greenspan warned that the United States must quickly begin to erase red ink to avert possible disaster.

“Our nation has never before had to confront so formidable a fiscal crisis as is now visible just over the horizon,” said Greenspan, who headed the central bank from 1987 to 2006.

Greenspan, a long-time deficit hawk, was seen as somewhat of an economic oracle while he headed the Fed and his word routinely moved financial markets.

Respect for Greenspan waned when the nation slipped into a recession after he left office. Many blamed him for policies that inflated the housing bubble that led to the recent financial collapse.

Yet his support could help convince Congress to give up some of its authority to a bipartisan commission which would consider tax hikes and spending cuts to keep debt at a sustainable level.

Public concern about the debt has mounted as the government posted a record $1.4 trillion deficit for the fiscal year that ended September 30. The issue is certain to be a factor in the November 2010 congressional election.

Greenspan backed a proposal by Democratic Senator Kent Conrad and Republican Senator Judd Gregg for an 18-member task force on deficit reduction.

The commission would recommend possible spending cuts or tax hikes the Senate and House of Representatives would have to consider.

A 60 percent super majority would be needed in each chamber for approval. Lawmakers could not change the recommendations, however.

The task force “is an excellent idea…. (it) is going in the right direction and I hope you succeed,” Greenspan said.

Otherwise, Greenspan said, investors could push up interest rates on Treasury bonds and interest payments could consume the federal budget.

The proposal has the support of 14 Democrats and 21 Republicans in the 100-member Senate. Sixty votes would likely be needed to win Senate approval.

The White House is considering a commission of its own, but it would have less power to force Congress to take action unless President Barack Obama and congressional leaders made it a priority, Conrad said.

“We’re willing to be flexible,” Conrad said. “We’re interested in getting a result.”

A tried-and-true Washington tactic for politicians to offload painful choices, the commission could make it easier for lawmakers to sign off on unpopular measures like trimming retirement spending or raising taxes.

The 18-member commission, comprised of eight lawmakers from each party, plus two from the Obama administration, would report its findings in the months after next year’s election, when lawmakers would presumably feel less political pressure.

While there is plenty of support to cut the deficit, there is deep disagreement over how to do it.

Another proposal by conservative Democrats in the House of Representatives would require Congress to find ways to pay for most new spending.

Backers had hoped to attach their proposals to legislation that would substantially boost the $12.1 trillion debt limit, which will likely be reached within weeks.

But Democratic leaders opted to boost the debt limit by a smaller amount, to carve out time to reach consensus on debt-limiting tactics.

The House narrowly approved a $290 billion hike on Wednesday, and the Senate is expected to consider it before the end of the year.

(Editing by Andrew Hay)