CQ TODAY ONLINE NEWS – BUDGET
Nov. 21, 2011 – 1:32 p.m.
Deficit Panel Heads Toward Its Likely Demise With Little Drama at the End
By Paul M. Krawak and Richard E. Cohen, CQ Staff
Members of the joint deficit reduction committee were expected to admit defeat in their quest for a budget-cutting deal later Monday, most likely after U.S. stock markets close for the day.
Still, several members of the panel huddled at midday in Massachusetts Democrat
Under last summer’s debt limit increase law (PL 112-25), the Joint Select Committee on Deficit Reduction has until Nov. 23 to vote on a proposal. But as a practical matter, the panel must have an agreement by midnight Monday to meet a statutory requirement of 48 hours notice of any proposal.
If the panel fails to find at least $1.2 trillion in deficit savings, automatic spending cuts will be triggered, although they will not begin until January of 2013. Potential deals totaling both more and less than $1.2 trillion have been proposed and rejected by committee members in recent weeks.
The promise of automatic cuts absent a deficit committee agreement seems likely to curtail any major reaction in bond markets, although lawmakers may be nervous about a stock market slump. The panel’s co-chairmen, Sen.
Lawmakers from the panel had fanned out on the Sunday talk shows, but the two sides evidently held no meetings Sunday. Some panel members exchanged views by telephone, according to aides. Up against the deadline for action, congressional leaders who were actively involved last week showed no sign of trying to broker a deal.
“No traction. Same as yesterday,” one Senate GOP aide said Sunday.
The standoff in the committee mirrored the gap that divided Republicans and Democrats earlier in the year, leading to the breakdown of deficit reduction negotiations between President Obama and House Speaker
As six members of the panel, including the co-chairmen, traded blame on the Sunday interview shows, it was clear that the $1.2 trillion in automatic, across-the-board spending cuts are now a fallback position to blunt the absence of a deficit deal.
Saving Defense
Republicans have already begun to look for ways to adjust the automatic cuts, known as a sequester, to soften their impact on the Pentagon.
The Defense Department is slated to shoulder half of the automatic cuts, amounting to $600 billion through 2012. The automatic cuts were enacted as part of the debt limit law, and intended to serve as a hammer to force the joint committee to act.
Defense Secretary
Deficit Panel Heads Toward Its Likely Demise With Little Drama at the End
Senate Minority Whip
“We do have the opportunity, even if the committee fails to work around the sequester, so that we still have $1.2 trillion in savings over 10 years but it’s not done in the very draconian way that Secretary Panetta is referring to,” Kyl said.
Public Unhappiness
The apparent collapse of the joint committee’s efforts is likely to add to the already low public opinion of Congress. In a survey released Nov. 14, Gallup found that 13 percent of respondents approve of Congress — a record low and a steady drop from the 24 percent approval rate recorded in May.
Gallup reported that if the joint committee does not reach an agreement, “these measures of the public’s faith in Congress are likely to drop even lower,” based on its earlier findings that the public wants Congress to reach a compromise.
The White House urged Congress on Sunday to exert fiscal discipline while defending Obama’s decision to remain detached from the joint committee’s negotiations after issuing recommendations to the panel two months ago.
“The president was engaged in daily discussions throughout the summer on how to reduce the deficit in a balanced way and in September he put forward a very detailed set of recommendations to the joint select committee to achieve deficit reduction well beyond the committee’s mandate,” White House spokeswoman Amy Brundage said. “Avoiding accountability and kicking the can down the road is how Washington got into this deficit problem in the first place, so Congress needs to do its job here and make the kind of tough choices to live within its means that American families make every day.”
The joint committee’s odds of success have been declining for days. Most recently, Democrats rejected a Republican offer to go part way toward the deficit reduction goal with a $643 billion proposal that relied on cuts in domestic discretionary spending and non-health care mandatory programs to soften the impact of a sequester. Democrats dismissed the Republican offer on Nov. 18, insisting that any bipartisan plan would have to include significant tax revenue as well as spending cuts.
Several members of the panel met Nov. 19 in a last ditch effort to keep negotiations alive. But by Sunday, although lawmakers continued to insist that a deal was possible, they provided no signs that a breakthrough might be in the cards.
Many Offers, No Deals
Since the joint committee began meeting in early September, Democrats and Republicans on the panel have offered several proposals, including a $2.3 trillion plan by Senate Finance Chairman
Republicans have criticized Democrats for refusing to accept any spending cuts or substantive changes to entitlement programs without tax increases of a size that the GOP said would hurt the economy. Democrats have countered that Republicans refused to consider any steps that would ensure top earners provide a share of the savings through higher taxes — what they called a “balanced” solution.
Alan K. Ota and Joseph J. Schatz contributed to this story.