The U.S. government should start using the $25 billion it has collected for dealing with nuclear waste for its intended use rather than hoarding it to reduce the deficit, a bipartisan panel said on Friday. The Nuclear Waste Fund is currently used to "reduce the apparent deficit," the report said. It acknowledged that freeing up the money would be politically difficult. President Barack Obama and Congressional leaders face an August 2 deadline to reach an agreement to raise the U.S. borrowing limit and cut spending. But the government has a "fundamental ethical obligation" to deal with the 65,000 tonnes of toxic nuclear waste piling up alongside reactors around the country, said the presidential "Blue Ribbon Commission" on waste, comprised of 15 experts. "The overall record of the U.S. nuclear waste program has been one of broken promises and unmet commitments," the panel appointed by the White House said in a 154-page report. The report, with seven recommendations on waste, is a step toward solving the issue, key to the future of nuclear power, a spokesman for the Energy Department said in a statement. It will be open for comment until October 31, and the panel will give its final report to the Energy Secretary by January 29. POLITICAL TUG-OF-WAR ON YUCCA MTN Japan's Fukushima Daiichi nuclear disaster in March brought renewed focus on the problem of where to bury toxic waste, an issue that has been around since the United States first began developing nuclear weapons in the 1940s. Congress had mandated that spent fuel from power plants be buried deep inside Nevada's Yucca Mountain. But the Obama administration canceled that plan, which was opposed by many in the state, including Senate Majority Leader Harry Reid. The White House appointed the panel to study the issue for more than a year. It was told not to touch the Yucca Mountain issue, nor to look for specific sites to house waste. The panel said it is futile to try to "force a top-down, federally mandated solution" to waste and said communities need to be encouraged to volunteer to "host" it. "There is no short cut," the report said. It's unlikely the issue will move forward before the 2012 election, said Ed Batts, a partner with law firm DLA Piper, citing the "political tug-of-war" in Washington. "You've got (Senate Minority Leader) Mitch McConnell on one side saying, basically, 'Yucca Mountain or bust,' and you've got Harry Reid diametrically opposed, saying, 'Not in my backyard," Batts said. A group of prominent House Republicans said on Friday that taxpayers have already spent almost $15 billion on Yucca Mountain and the plan should go ahead. "It is time to stop playing politics with America's nuclear waste management policy and move forward with the Yucca Mountain project," said Ralph Hall, chairman of the House science committee. INTERIM STORAGE, PERMANENT DUMPS The Blue Ribbon panel recommended a network of interim storage sites for waste and one or more permanent geologic dumps -- ideas it discussed at a public meeting in May. The Nuclear Energy Institute, which represents the industry, said it supported the panel's main recommendations. But a group critical of nuclear energy said interim sites would take decades, and suggested the government require plants to move waste out of pools and into hardened "dry cask" storage buildings on-site. The alternative would be "something that can be done relatively quickly and more safely than moving waste willy-nilly around the country in an effort to make it look like there is a solution," Physicians for Social Responsibility said in a statement. LEGACY OF BROKEN PROMISES The report urged a new government organization to negotiate with communities and build and manage the sites, taking a fresh approach after decades of false starts and mistrust. Such an organization would need access to the Nuclear Waste Fund, which grows by $750 million per year -- money utilities collect from electricity customers. Utilities could be given permission under existing laws to put the money into a trust account at a third-party bank while the administration and Congress work out how to free the fund for its intended purpose, the panel said. The government was supposed to begin accepting spent nuclear fuel in 1998, part of the deal with utilities that collect the money. "We are hopeful, though not entirely optimistic, that this bipartisan report will not fall on deaf ears," said Tony Clark, president of the National Association of Regulatory Utility Commissioners, in a statement. More than 70 lawsuits have been filed over the government's failure to keep its end of the deal, and taxpayers have so far paid $956 million in settlements as well as $168 million in legal costs, the report said. Damages could total more than $16 billion by 2020 if the government can't handle the waste by then, the panel said.