US Super Committee on Spending Cuts Close to Admitting Defeat

The United States faces economic crisis after members of the bipartisan congressional “super committee” given the task of finding spending cuts of $1.2 trillion admitted on Sunday night that they are heading for failure.

Republican committee member John Kyl told NBC that his party had offered compromises but had been blocked by Democrats' unwillingness to cut spending. "In Washington there are a group of folk who will not cut a dollar unless we raise taxes," Kyl said. Photo: Cactusbillaz/Flickr

The committee, created in August, has until Wednesday to report a plan to cut $1.2tn from the nation’s deficit. Failure to do so will trigger automatic cuts to defence and social welfare programmes starting in 2013.

After a year of bruising budget battles, it is another sign that U.S. lawmakers are too entrenched to compromise on the tax increases and benefit cuts that budget experts say are needed to set the country’s finances on a stable path.

The committee, with six Republicans and six Democrats, has until Wednesday to vote on a deal, but the deadline to have a legislation written and presented to entire panel is Monday.

Economists warned on Friday that failure by the “super committee” could have dire consequences for the US and lead to another downgrade of its credit rating.

But in the final hours of negotiations, committee members from both sides said they were still at loggerheads on issues that have troubled the two sides since the committee was set up.

The panel’s failure will cement notions of a dysfunctional Washington among voters and investors already disenchanted with the brinkmanship that brought the country to the edge of a first-ever debt default in August.

Republicans will scramble to shield the military from $600 billion in automatic spending cuts that are triggered, beginning in 2013, in the absence of a deal.

Democrats will try to extend short-term economic stimulus measures, such as enhanced unemployment benefits and a payroll tax cut, that they had hoped to roll in to any super committee deal. Analysts say the economy could slide back toward recession if they expire as planned at the end of the year.

Meanwhile, Senator Jon Kyl (R-Ariz.) a member of the congressional super committee charged with devising a plan to shrink the national debt, pledged on Sunday to find a way to limit the defense budget cuts that would be triggered by that committee’s likely failure.

Kyl, who is retiring from Congress, ruled out simply wiping away the triggers altogether. But his argument that the sequester falls too heavily on defense has picked up steam on the Hill.

The president has, recently, said he would not support changing the parameters of the trigger. And when pressed privately, White House aides have always argued that House Speaker John Boehner (R-Ohio) shares their sentiment.

But operatives within the Democratic Party are already waxing skeptically about their own lawmakers keeping those particular cuts in place, predicting that they’ll buckle to avoid being branded soft on defense.

“I can’t imagine that knowing of the importance of national defense that both Republicans and Democrats wouldn’t find a way to work through that process so that we still get the $1.2 trillion in cuts but it doesn’t all fall on defense as [Defense] Secretary [Leon] Panetta pointed out,” Kyl said on “Meet the Press.”

“I think there is a way to avoid that if there is good will on both sides. And again I think when the reality sets in even those Democrat friends who would like to see more defense cuts … will find ways to work around that,” he said.

Speaking after Kyl on “Meet the Press,” Sen. John Kerry (D-Mass.), another supercommittee member, sounded the alarm against that happening.

“Jon just talked about how they are not going to do that sequester,” Kerry said. “He just talked about how they are going to get out from under it. There is a real threat that not only will there be a downgrade but that the market on Monday will look again at Washington and say, ‘you guys can’t get the job done.’ And just the political confusion and gridlock is enough to say to the world: ‘America can’t get its act together.'”

Pat Toomey, a Republican committee member, told CBS’s Face the Nation: “Time is short and it’s going to be very difficult.” He said it was “not entirely too late” but reaching a deal would be tough.

“There was an unwillingness to cut any kind of spending at all unless there was a huge tax increase,” Toomey said. “There is still an opportunity. There is a plan on the table that would at least take us half way to our goal, which is scored. It’s ready to go; we could still get something done. If the Democrats would come back to us with a counter-proposal, we’d work on it.”

President Barack Obama kept his distance from the talks, choosing instead to emphasize a job creation package that was blocked by Republicans in Congress. Aides believe Obama will be able to use the super committee’s failure to paint Republicans as obstructionist as he seeks re-election. [via Huff Post, Reuters, Guardian and The Telegraph]

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