Panel Fails to Reach Deal on Plan for Deficit Reduction
WASHINGTON — After one last bout of fitful but futile talks, Congressional negotiators conceded the obvious: that the joint Congressional committee charged with drafting a deficit reduction package would miss its deadline this week. But they did not quite give up the ghost of a chance that a solution might be found later.
“After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee’s deadline,” said a statement issued late in the afternoon by Representative Jeb Hensarling of Texas and Senator Patty Murray of Washington, the panel’s Republican and Democratic co-chairs.
“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,” they said. “We remain hopeful that Congress can build on this committee’s work and can find a way to tackle this issue in a way that works for the American people and our economy.”
The White House said earlier in the day that only Congress could have produced a solution, while Republican presidential candidates moved to frame the committee’s failure to meet its deadline as a lack of leadership by President Obama.
Already some Republicans were saying Monday that they would try to spare the huge and automatic cuts to military spending that will be triggered eventually if Congress cannot agree on a deficit reduction plan.
If that Republican idea gained little traction among Democrats, neither were Republicans open to any revival of big increases in revenues as a solution.
Asked what had happened at the last-ditch meeting Monday, a Republican close to the negotiations said that Senator John Kerry of Massachusetts “went rogue and tried to float another iteration of a trillion dollar tax hike, but it does not appear to have any other support from Democrats.”Optimism was never high that the panel would succeed, but stock markets were still dropping at midday, with stocks off sharply as bond yields fell.
At the White House, where the president signed legislation intended to spur the hiring of veterans, Mr. Obama urged lawmakers to get back to work on economic issues in a spirit of bipartisanship, but made no direct reference to the collapse of the deficit talks over the weekend — even though some of the legislators involved were attending the signing ceremony.
The White House press secretary, Jay Carney, pointedly noted that the responsibility for getting a deal belonged to Congress, not the White House.
“They should do the right thing and come together,” Mr. Carney said. “From the beginning of this process, what the Congress needs to do to get this done has been obvious to everyone.”
At a campaign stop in New Hampshire, one of Mr. Obama’s chief Republican rivals, Mitt Romney, said Monday that what was most disappointing about the panel’s failure was “that our president has had no involvement with the process.”
“I find it extraordinary that there would be set up a committee, with such an important mission as finding a way to provide fiscal sanity in America, and with the penalty, if that fiscal sanity is not found, of a $600 billion cut to our military,” Mr. Romney said.
He added that the White House should promote legislation that would hold the military out of a set of automatic cuts, known as sequestration and divided between security and domestic programs, that are set to trigger in 2013 unless some other resolution is devised.
As part of the legislation written to raise the debt ceiling earlier this year, a failure of Congress to reach a deal by the end of the year would result in $1.2 trillion in automatic spending cuts in domestic and military programs over 10 years, starting in January, 2013 — after elections that could reshape the Congress and perhaps replace the president.
“We need to more appropriately allocate spending reductions,” Senator Jeff Sessions of Alabama, the ranking Republican on the Senate Budget Committee, said in an interview. “Congress could alter the sequestration. I am hoping for that.”
On Monday, several panel members from both parties — four Democrats and three Republicans — met in the office of Senator Kerry, a Democrat, at his behest, along with Senator Jon Kyl of Arizona, a Republican member.
As he left the meeting, Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee, said: “We are working as hard as we can. We are continuing to meet.”
Mr. Baucus said panel members were discussing a “new idea” floated by Mr. Kerry. Mr. Baucus declined to give details. Aides to committee members said the discussions had not narrowed the vast differences between the two parties over taxes and entitlements.
Senator Baucus said, “Both sides are feeling angst, more angst, at the possibility of no agreement, so they are working harder and more creatively.”
The Republicans, along with Mr. Kyl, were Representative Fred Upton of Michigan and Senator Rob Portman of Ohio. The Democrats, besides Mr. Baucus and Mr. Kerry, were Representative Chris Van Hollen of Maryland and Ms. Murray.
While the meeting began as a bipartisan affair, the Republicans left the Democrats to ponder their fate alone.
With the apparent collapse of the deficit reduction committee, Republicans in Congress were looking for other ways to rein in federal spending. Some House Republicans have discussed the possibility of seeking a vote on deficit reduction proposals advanced in the last month by Republican members of the committee. While such proposals would have no future in the Senate, they would give House Republicans an opportunity to show their commitment to fiscal restraint.
In the next month, lawmakers face deadlines to deal with several pressing issues: extension of a payroll tax holiday, extension of jobless benefits for the long-term unemployed, a 27 percent cut in Medicare payments to doctors and relief from the alternative minimum tax.
Items on this list carry big price tags. When Congress addressed them last year, the Congressional Budget Office said the temporary reduction in the payroll taxes would cost more than $110 billion, while the temporary extension of jobless benefits cost $55 billion and the remedy for the alternative minimum tax cost more than $130 billion. Shielding doctors from pending cuts in their Medicare fees would cost at least $20 billion to $30 billion.
Republicans in both houses said they would insist that Congress find ways to offset most of these costs. Otherwise, they said, the upshot of a year focused on deficit reduction could be an increase in the deficit.
Although stocks on Wall Street traded sharply lower Monday afternoon, some analysts said that it was Europe’s debt crisis, not America’s fiscal impasse, that was depressing sentiment.
Yields on 10-year Treasury bonds, in fact, were down to about 1.95 percent, while prices were up, a sign that investors continue to see assets like Treasuries as safe havens.
In Europe, on the other hand, interest rates on government bonds in the countries seen as most troubled, Italy and Spain, rose to near record levels, and Moody’s Investors Service warned that France’s top credit rating was vulnerable.
Here and there suggestions were heard that things might work out in the end, somehow.
Representative Rob Andrews, Democrat of New Jersey, reminded an interviewer on CNBC that some spending cuts were already in hand from the summer’s negotiations, others might take place automatically.
“Remember that there’s a trillion-two of spending cuts now locked in when the committee fails,” he said. “Now, there’ll be an effort to repeal that lock-in, but I think the repeal will fail. And therefore, we’ll get another trillion-two in spending cuts, which is not a bad thing.”
Trying to sound hopeful, Mr. Van Hollen, a Democratic member of the panel, emerged from the Kerry-Kyl meeting on Monday and said, “We’re just having last-minute discussions.”
source: nytimes.com
