Deficit "super committee" stalled as deadline looms

WASHINGTON Sat Nov 19, 2011 5:49pm EST

1 of 6. A man photographs the Capitol at sunset in Washington November 18, 2011. Inside the Capitol, members of the 'super committee' met throughout the day.

Credit: Reuters/Kevin Lamarque

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WASHINGTON (Reuters) - Both sides of Congress' deadlocked "super committee" held separate talks on Saturday, but formal negotiations remained stalled, reaffirming gloomy predictions that the deficit-fighting panel may fail.

With a midnight Wednesday deadline fast approaching, the panel's six Republican and six Democratic members were still far apart on how to attain a goal of finding at least $1.2 trillion in budget savings over the next 10 years.

The Republican members held a Saturday morning conference call among themselves, but details about what was said on it were not immediately available, aides said.

Having rejected the latest Republican offer, the six Democrats were holding only private conversations this weekend, with no group meetings planned, aides said.

In a telling remark, Republican Senator Jon Kyl, asked by reporters on Saturday about the No. 1 point of compromise now, said, "Well, I'm not sure there is one."

At the same time, he said, "Nobody wants to quit until the stroke of midnight." Kyl is a super committee member.

The corridors of Congress were largely empty on Saturday. While most super committee members were in Washington, only Kyl was seen by reporters in his Capitol Hill office.

In marked contrast to the secrecy that has surrounded much of the committee's deliberations, six panel members were due to appear on Sunday television political talk shows. In recent days, both sides have engaged in a blame game, positioning themselves for the fallout that could result from failure.

The super committee was born out of last summer's bruising debt ceiling battle between Republicans and Democrats, which brought the world's biggest economy to the brink of default and cost it its AAA credit rating from Standard & Poor's.

Given unusual powers to tackle the U.S. government's budget deficit and debt, which topped $15 trillion on Friday, the committee was seen by many as the best chance, in the near term, for the United States to get control of its deficits.

MARKET EXPECTATIONS LOW

Financial markets, focused on the European debt crisis, have low expectations for the panel. Some analysts are already looking beyond it to the year-end expiration of economic stimulus measures such as payroll tax cuts, fearing that the end of these could damage the fragile U.S. economic recovery.

Then there are the November 2012 elections and a battle over Bush administration tax cuts extended through 2012. Some analysts said partisan positioning ahead of those fights has undermined the super committee's efforts.

"There's still a chance of a deal, but nearly the entire Washington community is rooting for failure," said Jim Kessler, vice president for policy at Third Way, a centrist think tank.

A stock market rally could well result if the super committee defies the odds with a last-minute deal, but markets were unlikely to swoon if no pact emerges, analysts said.

Automatic budget cuts, evenly split between domestic and military spending, are due to kick in in 2013 if the committee fails to reach an agreement. But Congress could try to rework or undo the legislation mandating the cuts before then.

"It still seems mind-boggling that they could break up without doing anything. So I still think they'll get something -- not $1.2 trillion, perhaps a deal around $700 billion," said Potomac Research policy analyst Greg Valliere.

NO CERTAIN CRISIS

Unlike earlier budget standoffs, a failure next week would threaten neither a government shutdown nor a debt default.

The threat of automatic cuts has not been enough to jolt Republicans out of their opposition to new tax increases or Democrats out of their defense of spending for social programs such as Medicare, Medicaid and Social Security.

Driven skyward by deep tax cuts, two foreign wars, a financial crisis and the start of a severe recession, all during President George W. Bush's administration, the nation's debt has only expanded under President Barack Obama.

The annual budget deficit, pegged to be $1.3 trillion this year, has fallen slightly under Obama. But the tax code is still riddled with revenue-reducing loopholes and sharply higher Medicare spending looms ahead as the baby boom ages, painting a dire long-term U.S. fiscal picture.

Markets and voters have grown increasingly frustrated by the inability of the Obama administration and a politically polarized Congress to take firm action. Public approval ratings for Congress are at rock-bottom levels.

Republican Senator Patrick Toomey, delivering his party's weekly radio address on Saturday, urged Democrats to help craft a deal and said it was still possible one could be achieved.

"The hour is late ... But I remain hopeful that we can meet our goal," Toomey said.

House of Representatives Speaker John Boehner, the top Republican in Congress, on Friday floated an offer to try to break the logjam. His plan would save $643 billion over 10 years, about half the panel's goal, but the two sides could not even agree on what was in the plan.

(Reporting by Thomas Ferraro, Donna Smith, Patrick Temple-West, Rachelle Younglai and Kevin Drawbaugh. Writing by Kevin Drawbaugh, Editing by Mary Milliken)

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Comments (29)
SanPa wrote:
Take. Take Take. But do nothing for America. Leave it to the GOP to poison the deal … by not dealing.

Nov 18, 2011 8:02pm EST  --  Report as abuse
McBob08 wrote:
Good for the Democrats for standing up for Americans. The Republicans need to wake up and realize their long careers of shielding the rich from paying their fair share are over. Any deal that doesn’t significantly increase taxes for the rich, and keeps its mitts off of vitally-essential services like Medicare, Medicaid and Social Security is not acceptable. These things are not “entitlements”; they are Essentials, and any bill that attacks them attacks the very core of American values.

It’s time for the era of outrageous profits for the rich to end. It’s time for them to feel at least a small touch of the hardships that the rest of Americas live with every day. There is no Constitutional right to profits, so it’s time to stop pretending there is. If government laws and regulations restrict business, then that’s just the way it’s going to have to be; and if they try to pass those expenses onto consumers, they’re going to start losing customers. Time to give the Elite some serious Obedience Training.

Nov 18, 2011 9:41pm EST  --  Report as abuse
Wassup wrote:
Democrats or Republicans…it doesn’t matter which. Neither has the best interests of Americans or America at the forefront as proven here. The panel appears to be nothing more than a political smoke screen to satisfy the American voter that action demanded for change in fiscal policy and sound budgeting was being accomplished. It also reinforces why the American voter must turn out in November, 2012 to vote out the leadership and incumbents of OUR Congress and Presidential office so as to be representative of the people, not a model of political posturing. Save America, vote for change next election.

Nov 18, 2011 11:13pm EST  --  Report as abuse
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