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Super failure: Deficit-cutting panel gives up

Posted November 21, 2011
Updated November 22, 2011

— Congress' supercommittee conceded ignominious defeat Monday in its quest to conquer a government debt that stands at a staggering $15 trillion, unable to overcome deep and enduring political divisions over taxes and spending.

Stock prices plummeted at home and across debt-scarred Europe as the panel ended its brief, secretive existence without an agreement. Republicans and Democrats alike pointed fingers of blame, maneuvering for political advantage in advance of 2012 elections less than a year away.

The impasse underscored grave doubts about Washington's political will to make tough decisions and left a cloud of uncertainty over the U.S. economy at the same time that Greece, Italy, Spain and other European countries are reeling from a spreading debt crisis and recession worries.

Lawmakers of both parties agreed action in Congress was still required, somehow, and soon.

"Despite our inability to bridge the committee's significant differences, we end this process united in our belief that the nation's fiscal crisis must be addressed and that we cannot leave it for the next generation to solve," the panel's two co-chairs, Sen. Patty Murray, D-Wash., and Rep. Jeb Hensarling, R-Tex., said in a somber statement.

They added it was not possible to present "any bipartisan agreement" — omitting any reference to the goal of $1.2 trillion in cuts over a decade that had been viewed as a minimum for success.

President Barack Obama — criticized by Republicans for keeping the committee at arm's length — said refusal by the GOP to raise taxes on the wealthy was the main stumbling block to a deal. He pledged to veto any attempt by lawmakers to repeal a requirement for $1 trillion in automatic spending cuts that are to be triggered by the supercommittee's failure to reach a compromise, unless Congress approves an alternative approach.

Those cuts are designed to fall evenly on the military and domestic government programs beginning in 2013, and Defense Secretary Leon Panetta as well as lawmakers in both parties have warned the impact on the Pentagon could be devastating.

In reality, though, it is unclear if any of those reductions will ever take effect, since next year's presidential and congressional elections have the potential to alter the political landscape before then.

The brief written statement from Murray and Hensarling was immediately followed by a hail of recriminations.

Senate Majority Leader Harry Reid said Republicans had "never found the courage to ignore the tea party extremists" and "never came close to meeting us half way."

But Sen. Pat Toomey, a Pennsylvania Republican who authored a GOP offer during the talks, said, "Unfortunately, our Democratic colleagues refused to agree to any meaningful deficit reduction without $1 trillion in job-crushing tax increases."

Democratic Sen. Kay Hagan of North Carolina said she was frustrated by the lack of compromise.

Sen. Hagan on deficit super-committee Sen. Hagan on deficit super-committee

"It really concerns me that you've got a group of people who are sitting at the table negotiating and nothing happens," Hagan said. "Last week, we had 100 House members – Democrats and Republicans – and 45 Senators – Democrats and Republicans – come together to say to the supercommittee, 'We're behind you. We want you to go big. We want $4 trillion in cuts.'"

Republican Sen. Richard Burr of North Carolina was returning from a trip to Afghanistan on Monday and couldn't be reached for comment.

Said Gov. Rick Perry of Texas, a GOP presidential hopeful, "It's amazing to what lengths he (Obama) will go to avoid making tough decisions."

It was unlikely the outcome would materially improve Congress' public standing — already well below 20-percent approval in numerous polls.

And the panel's failure left lawmakers confronting a large and controversial agenda for December, including Obama's call to extend an expiring payroll tax cut and unemployment benefits. Democrats had wanted to add those items and more to any compromise, and lawmakers in both parties also face a struggle to stave off a threatened 27 percent cut in payments to doctors who treat Medicare patients.

Based on accounts provided by officials familiar with the talks, it appeared that weeks of private negotiations did nothing to alter a fundamental divide between the two political parties. Before and during the talks, Democrats said they would agree to significant savings from benefit programs like Medicare, Medicaid and Social Security only if Republicans would agree to a hefty dose of higher taxes, including cancellation of Bush-era cuts at upper-income brackets. In contrast, The GOP side said spending, not revenue, was the cause of the government's chronic budget deficits, and insisted that the tax cuts approved in the previous decade all be made permanent.

Raleigh investment adviser Gerald Townsend said uncertainty in Washington makes for a bumpy ride on Wall Street, where the Dow Jones average dropped by 249 points on Monday.

"We don't know what the tax rates are going to be, we don't know what the budget's going to be and we can't get our act together," Townsend said. "That's just not what the world's lone superpower should be doing. We should be better than this."

Although he urged investors not to panic, he said continued uncertainty on debt could lead to another credit downgrade for the U.S.

The Democrats' "idea was this was the opportunity to raise taxes,'" said Sen. Jon Kyl of Arizona, the Senate's second-ranking Republican and a member of the supercommittee. "It didn't matter what we proposed; the price of that was going to be $1.3 trillion in new taxes," he added in a CNBC interview, although Democrats made at least two offers that called for smaller amounts of additional tax revenue.

Sen. John Kerry, D-Mass., said on MSNBC, "I have demonstrations outside my office. I've had rallies. I've had unbelievable amount of pushback because we were ready and prepared to put on the table some of those so-called sacred cows." Republicans, he said, refused to consider cancellation of the tax cuts for the wealthy.

The talks also were hampered by internal divisions within both parties.

Republicans offered a plan crafted by Sen. Pat Toomey of Pennsylvania about two weeks ago that included an additional $250 billion in tax revenue through an overhaul of the tax code that included reducing the top tax rate from 35 percent to 28 percent. Some Republicans criticized it as a violation of the party's long-standing pledge not to raise taxes. Even some in the GOP leadership, including Senate Republican Leader Mitch McConnell of Kentucky and House Majority Leader Eric Cantor of Virginia, declined to endorse it in public.

At the same time, Democrats ridiculed it as a tax cut for the rich in disguise — even privately criticizing Sen. Dick Durbin, D-Ill., when he said it could signal a breakthrough — and it failed to generate any momentum toward compromise. Senate Majority Leader Harry Reid, D-Nev., and others also accused Republicans of bowing to the wishes of Grover Norquist, an anti-tax activist whose organization has gathered signatures from GOP candidates on a petition pledging never to raise taxes.

And Democrats had problems of their own. An offer presented by Sen. Max Baucus, D-Mont., to cut about $3 trillion from future deficits failed to win the backing of two of the six committee members of his own party. Officials said they objected because it would have curtailed future cost-of-living increases for Social Security recipients, some liberals said in remarks on the Senate floor they opposed it and Republicans criticized them for intransigence.

Baucus jettisoned it from a subsequent offer that also slashed an earlier demand for tax revenues.

The panel's failure marked the end of an extraordinary yearlong effort by divided government to grapple with budget deficits that lawmakers of both parties and economists of all persuasions agreed were unsustainable.

Negotiations in the Capitol led by Vice President Joseph Biden were followed by an extraordinary round of White House talks in which Obama and House Speaker John Boehner sought a sweeping compromise to cut trillions from future deficits. They outlined a potential accord that would make far-reaching changes in Medicare and other programs, while generating up to $800 billion in higher revenue through an overhaul of the tax code. But in the end, they failed to agree.

By contrast, the supercommittee never came close, instead swapping increasingly small-bore offers that the other side swiftly rejected.

Within the past week, Democrats said they would accept a Republican framework for $400 billion in higher tax revenue and $800 billion or so in spending cuts, while rejecting numerous key proposals.

Late last week, Boehner floated an offer that included $543 billion in spending cuts, fees and other non-tax revenue, as well as $3 billion in tax revenue from closing a special tax break for corporate purchases of private jets. It also assumed $98 billion in reduced interest costs.

It was swiftly rejected.


Associated Press writers Andrew Taylor, Alan Fram and Laurie Kellman contributed to this story.


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  • whatusay Nov 22, 2011

    josephlawrence43... you are totally correct. This was an "unconstitutional" sham from the beginning. How can 12 congress members take over the entire political process. I am from NC and had no one on that committee that represented me....that's illegal. The other 423 should be kicked out for dereliction of their duties. Newt Gingrich is correct, it was unconstitutional and they should all be kicked out of office.

  • josephlawrence43 Nov 22, 2011

    Lookit folks--this "supercommittee" was never intended to succeed. From the get go, it was a foregone conclusion that it would not. The first obvious reason is look at who was put on that committee--demo and rep. none of whom are known for cooperative attitudes, all of whom are dyed in the wool, unbendable dogmatic whatevers. Now we go back to square one where everybody gets to be a horses back side.

  • whatusay Nov 22, 2011

    The national debt will increase by $12 trillion over the next 8 years. The democrats can't agree to cut any spending, nothing. There only solution, increase taxes.

  • granville93 Nov 22, 2011

    He stayed out of it so he could blame the Republicans. Election year coming up. So now what is plan B?....no plan at all...the economy is not going away...perhaps it already has gone away.

  • Come On_Seriously Nov 22, 2011

    It must be the folks who once again are NOT paying attention that are blaming the president. Congress asked him to stay out of it so as not to over-politicize the whole process.

    Meanwhile, the repubs refused to remove the Bush tax cuts for the wealthy, while their 'offers' were for such things as simplifying the tax code by cutting things like the tax deduction on mortgage interest and how much help your grandma can get when she gets sick.

    Funny how the conservatives have always demonized the Ds for being all soft and talky while the Rs are hard-line stick-to-their-principles types, and yet- when talks break down, it is suddenly the fault of the party of discussion and compromise rather than those sworn to not budge from their oath to Grover Norquist.

    Now J McCain and L Graham want to undo the automatic cuts to the military that were their idea-you wanted that guy and that party as president? A person and party who'll just try to change the rules when it doesn't go their way?

  • twc Nov 21, 2011

    Only one party has 279 people pledged to the same individual!

  • same ole story Nov 21, 2011

    Super failure: Deficit-cutting panel gives up The only FAILURE is the President!!! Epic Failure on the lives of the American people!!!!!!! Jan. 2013 to fix our MAIN PROBLEM!!! YES WE CAN!!!

  • ssi Nov 21, 2011

    "The two-party system does not work when one of those parties is there simply to disagree with everything the other party attempts." - twc

    If party 1 disagrees with party 2, doesn't that also mean that party 2 disagrees with party 1? So which one is there to disagree with the other? It takes two.

  • twc Nov 21, 2011

    retroconsultant, how are you going to have bipartisanship against 279 Republicans pledge to the same unelected individual.

    I guess Norquist believes he is THE one link to the voters.

  • twc Nov 21, 2011

    I didn't spin the conspiracy theory. You must not have watched his interview last night. He admitted he wouldn't divulge his financial sources.

    Follow blindly; that's your right!