The debt reduction committee that was established specifically to dissolve Washington’s congressional gridlock, is on the verge of failing altogether. The committees failure makes nearly $1.2 trillion in spending cuts a likely possibility.
According to a Democratic aide working with the committee it is highly unlikely that the committee will be able to reach an agreement on the deficit savings. The aide is not permitted to discuss the case and wished to remain anonymous. In the email from the aide, it is stated that the likelihood that the committee talks can be salvaged is very poor.
The Congressional Budget Office is set to receive information allowing them to score a proposal in advance of the November 23 due date that the supercommittee is supposed to be completing a deal. Mitch Mcconnell, Republic Senate Leader, declared that “failure is not an option” for the created supercommittee panel that was thrown together in August after a heavy session of conflicted voting by Congress. The panel was thrown together after debating about raising the nation’s debt limit and the issue received a dismal 9 to 14 percent approval by congress.
Both Republicans and Democrats got on the radio on November 21 to point the finger at each other for not reaching a deal in time. The Democrats claimed that Republicans would not budge on their anti-tax agreement and Republics claimed that Democrats would not go along with their revenue raising offer that will also cut spending.
Pointing the Finger
Jon Kyl, U.S. Senator of Arizona, said that the Democrats turned down a deal that would create $250 billion in revenue by getting rid of a few tax breaks. The deal would generate all of that money while lowering the income tax rates at the same time. Kyle said that the Democrats are a group of people unwilling to cut spending unless they are raising income taxes at the same time.
John Kerry a well known Massachusetts Democrat says that Kyl’s statement just isn’t true. He exclaimed that the Democrats were willing to agree to a deal that cut $917 billion in spending without any additional revenue. The agreement went along with the August plan to raise the debt limit. The most recent Republican plan results in the highest tax cuts since the Depression.
On November 21 European stocks took another drop for the third consecutive day. The U.S. futures backed off in fear of a Congressional impasse. Both the Stoxx Europe 600 Index and the MSCI Asia Pacific Index lost 2.1 percent and 1.3 percent respectively. As the U.S. futures backed off the Treasuries advanced.
The standard and Poor’s 500 futures fell by 1.4 percent and the benchmark gauge for the American equities declined by over 3.8 percent in the past week. The equities decline was the largest loss in the past two months and French, Italian and Spanish bond yields increased over the same period of time. Fitch ratings believes that the poor economic condition of Europe creates a risk for American banks as well.
A Fade of Optimism.
The supercommittee members barely retain any hope that their efforts will result in an actual deal, but nobody wants to give up hope states Jeb Hensarling on Fox Sunday News. The reality is slowly beginning to overtake the committee’s hope.
If the committee fails to come up with an agreement soon there is 1.2 trillion dollars in spending cuts set to take place on both defense and domestic programs. The lack of a deal will provide President Barack Obama with a method for offering insurance benefits and a payroll tax cut for unemployed Americans, both of which expire at the end of 2011.