* Top Republican senator has high hopes for success
* 'Hybrid' automatic cuts/deficit deal might be endgame
(Repeats with no changes)
By Richard Cowan
WASHINGTON, Sept 8 A U.S. congressional "super
committee" convenes on Thursday to launch its search for at
least $1.2 trillion in new deficit reductions as global
financial markets look for signs that the world's largest
economy is trying to get its fiscal house in order.
When the panel of 12 congressional Democrats and
Republicans holds its opening meeting to set the rules of the
road, it will do so under difficult circumstances.
It has until only Nov. 23 to grapple with divisive
questions of whether to cut popular social safety net programs
and whether wealthy corporations or individuals should be taxed
more -- and it is doing so with the 2012 national elections
coming into focus.
Kicking off the tax debate, aides to Democrats on the House
Ways and Means Committee offered up a slew of options for
raising revenues, including ending some tax breaks for major
U.S. oil companies, reducing the value of tax breaks for the
wealthy and other revenue raisers. It also looks at ways to
lower government costs for the Medicare healthcare plan for the
The paper, obtained by Reuters, does not endorse any of the
options and many Democratic lawmakers had not yet even seen the
ideas, according to congressional aides. [ID:nN1E7861ML]
But Senate Republican leader Mitch McConnell was optimistic
on Wednesday about the panel's prospects for success.
"We certainly know they will meet their goals," he told
reporters. Then, on an even more upbeat note, he added, "And
we'll see whether they can even go beyond that."
His party's bitter fight with Democrats over raising the
U.S. debt ceiling this summer brought the country to the brink
of a default and led to an unprecedented downgrade of the U.S.
AAA credit rating.
Going beyond $1.2 trillion in savings would hearten
financial markets and U.S. credit rating agencies, which want
to see a couple trillion dollars more saved.
As the super committee stares down a national debt that
will soon race past the size of the entire $14.9 trillion
economy, its members know that failure to tackle deficits could
result in another downgrade of the government's debt rating.
That would be a new blow to a shaky U.S. economy at a time
when European countries also are struggling with a massive debt
crisis that threatens to ripple across the world.
"The country is facing a fiscal train wreck; progress
toward addressing that is one of the most important things
policymakers can do right now," said Andy Laperriere, an
analyst with the ISI Group in Washington.
Pressure to reduce government budget deficits is fueled
largely by conservative Tea Party activists' successes in the
2010 congressional elections but also by the knowledge that
tackling debt would inject confidence into the U.S. economy.
"You can't bring down the debt and deficit over the
long-term if you don't grow the economy," warned Steny Hoyer,
the No. 2 Democrat in the House of Representatives,
underscoring his party's insistence that deficit-reduction must
be paired with economic stimulus.
It is also a message that President Barack Obama aims to
deliver to a joint session of Congress later on Thursday when
he lays out his plan for creating more jobs.
With only about 10 weeks to come up with a plan that
Congress would then vote on by Dec. 23, the super committee
must come up with a plan that does not fall victim of the
partisan bickering that has sharply divided Capitol Hill and
the acrimony of the 2012 national elections.
The super committee's debate has been portrayed as an
Either a majority of the panel agrees to at least $1.2
trillion in new savings over 10 years -- on top of the $917
billion agreed to last month and $38 billion in April -- or
automatic spending cuts will be triggered, beginning in 2013.
But it might not be that clear-cut. One emerging scenario
envisaged by budget experts is a plan that combines some budget
savings with automatic spending cuts.
That could be a three-legged plan structured this way:
--Hundreds of billions of dollars worth of spending cuts
and some revenue increases over 10 years;
--The remainder of the 10-year, $1.2 billion in savings
would be automatically triggered;
--Big additional savings would kick in beyond 2021. This
bit could make savings to Social Security, Medicare, Medicaid
and Social Security -- the national retirement and healthcare
plans for the elderly and poor.
But even such a hodgepodge will be difficult as Democrats
would likely insist on tax cuts being coupled with benefit cuts
over the long term.
"Republicans are more dug in on not raising taxes and
Democrats are more dug in to not do anything meaningful on
entitlements without tax increases," Laperriere said.
(Editing by Cynthia Osterman)