The congressional super-committee could not reach an agreement to slice at least $1.2 trillion from the national debt, so leaders pulled the plug on the effort Monday afternoon and declared failure.
Rather than making a final effort at compromise, members of the special deficit-reducing panel, a dozen Republican and Democratic representatives and senators, pointed fingers at one another and cringed while awaiting the expected negative reaction from capital markets.
Perhaps the super-committee was doomed to fail, given sharp divisions over the underlying political questions preventing a grand bargain – whether taxes should be raised back to pre-2001 levels on wealthier Americans to bring in more revenue, or whether the biggest problem is the need to slow spending on entitlements such as Social Security and Medicare.
Back in the spring, Congress came close to allowing the federal government to shut down because it choked on the same questions and was unable to agree on legislation to increase the government’s borrowing capacity, the so-called debt ceiling. Standard & Poor’s cited the debt-ceiling gamesmanship as the reason it was downgrading the credit rating on U.S. debt.
The eventual debt-ceiling measure created the super-committee and tasked it with devising a plan to reduce the debt by at least $1.2 trillion with spending cuts, revenue increases or a combination. Now that it has failed, automatic cuts are supposed to take effect in 2013, by which point the Bush tax rates, which disproportionately benefitted the wealthy, will also expire.
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