Key House Democrat dour on deficit panel success
WASHINGTON (Reuters) - With Republicans and Democrats in a familiar deadlock over taxes, prospects are poor for crafting a deficit reduction deal before a November 23 deadline, a top Democratic lawmaker said on Wednesday.
Congressional leaders are becoming more involved in the high-stakes process, aides said. But there are no signs so far of progress by a "super committee" of 12 Republican and Democratic lawmakers toward a plan to reduce U.S. budget deficits by at least $1.2 trillion over 10 years.
"Expectations for the success of the super committee are low," Steny Hoyer, the No. 2 Democrat in the House of Representatives, told reporters.
Unusually, no meetings of the full panel have been scheduled for this week. The committee has held four public hearings and about a dozen closed-door sessions since it began meeting in September.
Revenue increases, which Democrats insist must be part of any deficit reduction deal, are at the heart of the super committee impasse, according to congressional aides.
"The ball is in the Republicans' court. Democrats are waiting to see something real on revenues" from Republicans, said one congressional aide who asked not to be identified.
Most Republicans are deeply opposed to tax increases, arguing they would damage an already anemic economic recovery. Democrats counter that if there are further cuts to government programs that hit poor and middle-income Americans, the rich also should pay higher taxes to share the burden.
Two Republican members of the super committee -- Representatives Dave Camp and Fred Upton -- left a meeting of House Republicans on Wednesday telling reporters that this week was a crucial one in the panel's work. They did not elaborate.
Failure by the super committee to reach a deal could stoke fears among investors worldwide that the U.S. political system is incapable of coming to grips with long-term deficit problems that could eventually throttle growth.
It would also pose risks for both political parties in the 2012 presidential and congressional elections. Polls show an overwhelming number of Americans disillusioned by the partisan bickering in Congress.
Without a deal by the super committee, $1.2 trillion in automatic spending cuts would be triggered starting in 2013 to help tame annual deficits that have been topping $1 trillion.
The cuts would hit defense and domestic programs hard -- something lawmakers from both parties say they want to avoid.
Growing uncertainty over success in the super committee, coupled with the lackluster U.S. economy, has prompted the Treasury Department to scrap plans to gradually shrink its debt sales, a Treasury official said on Wednesday.
Global Financial markets are still preoccupied with the euro zone's debt crisis, but that focus is likely to change as the November 23 deadline nears, analysts said.
"Right now, we're the healthiest patient in the hospital, "but eventually, our bondholders are going to decide they just don't want to keep buying our debt," said William Larkin, fixed-income portfolio manager at Cabot Money Management in Salem, Massachusetts.
If the super committee reaches a deal, or even the outline of one, the nonpartisan Congressional Budget Office must assess its effectiveness, and would need time to do that before the November 23 deadline.
House of Representatives Speaker John Boehner said he had been talking to some super committee members, but he did not give details of the discussions.
The panel has a "tough job," said Boehner, the top Republican in Congress. "I am going to do everything I can to help them."
President Barack Obama, who has not communicated with the super committee since offering it his $3.6 trillion deficit reduction plan in September, was to meet Senate Democratic leaders on Wednesday before he leaves for the G20 talks in Cannes, France, the White House said.
Senate Majority Leader Harry Reid plans regular conversations this week with super committee members, a senior Democratic aide said.
Last week, Democratic and Republican members of the super committee each presented deficit reduction proposals and quickly rejected the other side's plan.
Despite the deadlock, a bipartisan group of 100 House members urged the super committee on Wednesday to go far beyond its $1.2 trillion minimum mandate with a mix of spending cuts and revenue increases. But the 60 Democrats and 40 Republicans did not give specific recommendations.