* House Speaker Boehner steps in with new offer
* Democrats, Republicans emphasize differences
* Failure wouldn't have immediate consequences
By Richard Cowan and Rachelle Younglai
WASHINGTON, Nov 18 A high-profile congressional
effort to trim stubborn U.S. budget deficits appeared near
collapse on Friday as Democrats rejected a scaled-back proposal
from Republicans that contained few tax increases.
With Democrats and Republicans on a deficit-cutting "super
committee" deadlocked ahead of a Wednesday deadline, House of
Representatives Speaker John Boehner floated an offer to try to
break the logjam on tax increases and benefit cuts.
The plan would save $643 billion over 10 years, about half
of the panel's goal of $1.2 trillion, but the two sides were
unable to even agree what was in the plan.
Boehner aides said it included $229 billion in new revenues
and fees. Democrats said it would only generate $3 billion in
new revenue from closing a tax break for corporate jets.
"To have something on the table that does not ask the
wealthiest people in the country to share (the burden) ... is
unconscionable," said Senator John Kerry, a Democrat on the
One Republican on the panel said the two sides were
continuing to talk but time was running short.
"It's regrettable that they are not willing to make any
common sense reductions in spending and at the same time
they're insisting on job-killing tax increases," said
Republican Representative Dave Camp.
The panel will need to have a deal in place well before its
By late Friday, aides said no further meetings were
planned. Saturday also looked to be quiet, though members of
the panel were gearing up verbal combat Sunday morning TV talk
Congress already has rock-bottom approval ratings among the
American public after a year of down-to-the-wire budget
battles. Failure by the committee to reach a deal would likely
incite further disgust among voters as the 2012 election season
But, unlike budget standoffs in April and August, failure
would not lead to a government shutdown or a sovereign debt
default. Instead, automatic spending cuts of $1.2 trillion over
10 years, split evenly between military and domestic programs,
would kick in starting in 2013.
BUSH TAX CUTS A FACTOR
Many Republicans worry the automatic cuts to military
programs could compromise national security.
Democrats feel less urgency as programs for the poor and
the elderly, such as Medicare and food stamps, would be largely
shielded from the cuts.
They also see an advantage as temporary tax cuts enacted
under President George W. Bush are due to expire at the end of
2012 and Republicans are eager to forge a deal that would
overhaul the tax code before that time in order to avoid a
higher tax burden on the wealthy.
Some Republicans have said they could support tax increases
in return for an overhaul of benefits like Medicare, expected
to expand dramatically as the population ages. But they face
fierce opposition within their own party.
Democrats hope to include measures to stimulate the
struggling economy, such as a payroll tax cut and enhanced
jobless benefits due to expire at the end of the year.
Economists warn the economy could suffer if those measures are
not kept in place, and it could be harder to overcome
Republican skepticism and procedural barriers if they are not
included in a deal.
The panel must release any plan it comes up with at least
48 hours before a vote. That would point to Monday as a final
deadline, but lawmakers must give budget analysts time to
crunch the numbers as well.
MARKET REACTION UNCLEAR
It's not clear how investors would react to failure.
Markets plunged in August after a divisive battle over
extending the government's borrowing authority prompted ratings
agency Standard & Poor's to issue a first-ever U.S. debt
downgrade. The other two major ratings agencies have said they
would not necessarily follow suit if the committee deadlocks,
as long as the automatic cuts are allowed to kick in.
Investors' expectations are extremely low, which might
limit the scope of market reaction. Most are distracted by the
debt crisis in Europe, which may ensure a safe-haven status for
U.S. Treasury bonds and the dollar even if the committee fails
to agree on substantive cuts.
However, the automatic cuts may be seen as another negative
for the U.S. economy and could roil the stock market.
Boehner's plan represented a third option that would set
aside divisive issues like taxes and benefits and put together
a much smaller package containing measures both sides could
theoretically agree upon, which would reduce the severity of
automatic spending cuts.
But the Democrats' rejection of that approach showed the
two sides remain far apart.