Panel's inability to cut debt deal reflects divide
WASHINGTON -- The failure of Congress' "supercommittee" to propose even one dollar in deficit reduction has left Capitol Hill without a strategy for tackling the nation's spiraling debt — and left several trillion-dollar spending and tax issues that must be resolved as soon as next month.
The Joint Select Committee on Deficit Reduction announced Monday it could not come up with the minimum $1.2 trillion of deficit reduction required under its mandate, much less the $4 trillion that deficit hawks said was necessary to help stabilize the finances of the U.S. government, whose debt has topped $15 trillion.
The collapse of the 12-member bipartisan panel's negotiations rattled the financial markets and set the stage for mandatory cuts to defense and domestic programs that would begin in 2013 — after next year's presidential and congressional elections.
It ensures that the fiscal debate that has paralyzed Washington — between Democrats who want to protect expensive social programs and increase revenue by raising taxes on the richest Americans; and Republicans who want to trim government and have steadfastly rejected tax increases — will be a fundamental choice confronting voters in 2012.
For now, the panel's inability to reach a deal leaves Congress with a range of unfinished budget items that could have been part of a larger bargain over federal taxes and spending.
Social Security payroll tax cuts expire at the end of the year, meaning taxes could go up nearly $1,000 annually for someone who makes $50,000. More than 1 million unemployed workers could lose their jobless benefits beginning in January, when those benefits are scheduled to expire. Medicare reimbursement rates for doctors will be cut 27% unless Congress steps in by the end of the year, leaving many seniors without a doctor. And Congress has three weeks to pass nine spending bills to keep most of the federal government operating.
The supercommittee was borne of the last legislative debt crisis in August, when Congress had to raise the federal debt limit beyond $14.3 trillion or risk default. As part of a compromise plan to cut about $1 trillion over 10 years, congressional leaders appointed the panel to come up with at least $1.2 trillion more in cuts.
The plan came with a backup scenario: If the supercommittee failed to come up with those cuts, automatic across-the-board reductions would kick in, trimming $1.2 trillion over nine years starting in 2013. All areas of discretionary spending would be targeted equally.
The threat of the mandatory cuts wasn't strong enough to dislodge panel members from their entrenched positions. With a Wednesday deadline looming, the panel's demise appeared inevitable after a weekend of finger-pointing by both sides on Sunday talk shows. It became official in a 270-word statement from the supercommittee's co-chairs Monday afternoon.
"After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee's deadline," Rep. Jeb Hensarling, R-Texas, and Sen. Patty Murray, D-Wash., said in their statement.
The co-chairs spent most of the statement thanking committee members, staffers and "the American people for sharing thoughts and ideas and for providing support and good will as we worked to accomplish this difficult task."
