Super Committee: Failure Was an Option
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By PAUL KANE and
Lori Montgomery Wp,
The Washington Post
November 21, 2011

A special congressional supercommittee acknowledged failure Monday in efforts to cut the federal deficit by at least $1.2 trillion.

The failure, which sets in motion a mechanism for major across-the-board spending cuts, promptly triggered finger-pointing between congressional Republicans and Democrats.

“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,” the co-chairmen of the panel said in a joint statement.

“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,” the statement 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 supercommittee co-chairmen, Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Tex.), said they were “deeply disappointed that we have been unable to come to a bipartisan deficit reduction agreement.”

The panel’s failure was announced in the joint statement issued late Monday afternoon after the close of U.S. stock markets, which plunged during the day. Democrats had pushed for a joint public appearance by the committee’s co-chairmen, but even that goal proved elusive.

Sen. John F. Kerry (D-Mass.) floated a last-minute tax plan Monday and met in his office with a fellow Democrat on the panel, Rep. Chris Van Hollen (Md.), along with Republican senators Jon Kyl (Ariz.) and Rob Portman (Ohio). There was no breakthrough, however, and the supercommittee’s nearly three months of work ended quietly.

“It’s sort of a last-ditch effort to try to see if we could find a way to solve America’s problem here,” Kerry said in late afternoon. “We need to do deficit reduction. We don’t need to be doing another round of tax cutting.”

Kerry said the co-chairmen of the supercommittee “will tell us when and if it’s worth pursuing.” He denied Republicans’ contention that Democrats were not united around his plan.

Even before the supercommittee’s joint statement, news that the special deficit-reduction panel had failed to meet its mandate to shave $1.2 trillion from the federal debt helped drive down stock markets that were already jittery over the European debt crisis. The Dow Jones industrial average fell more than 2 percent, and the Standard & Poor’s 500-stock index and the Nasdaq also lost ground.

With the clock ticking toward a Thanksgiving eve deadline, the six Republicans and six Democrats on the committee had essentially given up on forging a compromise. Some elected instead to spend their final hours casting blame.

Kerry said efforts ultimately foundered over the Republican refusal to accept any tax increases on the wealthy in exchange for spending cuts.

“This is a matter of fundamental fairness,” Kerry told CNN. “We are stuck on this insistence of making the Bush tax cuts for the wealthy permanent. I think the American people will judge that to be insane.”

Kyl blamed Democrats for insisting that taxes on more affluent Americans be increased. “Our Democratic friends said we won’t cut one dollar more without raising taxes,” Kyl said. “That tells you a lot about the ethos in Washington. We went into the exercise to try to reduce federal government spending. What we get from the other side is, ‘No, we won’t make more cuts unless you raise taxes.’ ”

On Sunday, half of the 12 lawmakers on the committee turned to the political news shows as their outlet, speaking of their effort in the past tense and accusing the other side of intransigence that they blamed for the failure to clinch a deal.

The failure of the supercommittee triggers a punitive set of $1.2 trillion in automatic spending cuts to kick in at the start of 2013, with half coming from national security budgets. Kyl and other lawmakers have embraced reconfiguring the automatic cuts to save the Pentagon from such steep cuts, but any movement that decreases the overall savings runs the risk of causing financial ratings agencies to downgrade the U.S. Treasury’s debt.

Senior staff members ran a last round of checks Sunday to make sure there wasn’t some final give from the other side. There wasn’t. Under the committee’s rules, it needed to unveil legislation before midnight Monday.

Almost every member of Congress has left Washington for the week-long Thanksgiving break, so the legislative reaction to the committee’s failure will not come until early next month. The impasse leaves a host of other must-pass items, such as extensions for unemployment insurance and the payroll tax holiday, without any vehicle for passage before year’s end.

Despite a national debt that topped $15 trillion last week, the two sides could not bridge the taxes-vs.-entitlement divide. The GOP’s passion for keeping tax rates as low as possible meant the panel’s Republicans demanded steep entitlement cuts for small-to-modest increases in tax revenue, and the Democrats fiercely guarded entitlement programs unless the Republicans gave in on higher taxes.

It was the same stumbling block that prevented President Obama and House Speaker John A. Boehner (R-Ohio) from reaching the “grand bargain” they negotiated over the summer, an effort to trim $4 trillion from future borrowing by the Treasury.

The Obama-Boehner negotiation ended with an agreement on more than $900 billion in spending cuts to federal agency budgets over the next decade while creating the Joint Select Committee on Deficit Reduction — tasked with finding at least $1.2 trillion more in savings and voting out a plan before Thanksgiving.

The panel of six Democrats and six Republicans, granted extraordinary fast-track powers, began convening in early September with a series of hearings and closed-door meetings. The group, however, has broken down in the past month into a series of small huddles, with a handful of lawmakers working to hit their minimum target of $1.2 trillion and others working on a smaller backup plan that would cushion the blow from the automatic spending cuts.

Neither Hensarling nor Murray, the panel’s co-chairmen, formally admitted Sunday that the panel was hopelessly gridlocked. But each suggested a new effort was needed in the very near term to fix the government’s balance sheet.

“It wasn’t so much of a failure as it was a failure to seize an opportunity. . . . This nation better seize another one or we will be in big economic trouble,” Hensarling said on “Fox News Sunday.”

“I believe strongly that we still have the capability to come together to solve this problem,” Murray said on CNN”s “State of the Union.” “If the supercommittee can’t do it, then I hope that Congress will. In fact, I’m committed to solving this. You can’t just ignore this crisis.”

The trigger of automatic cuts should assuage jittery financial markets, which have been on a roller-coaster ride since the summer’s debt standoff in the United States and the struggle to tame even greater fiscal quagmires in Europe. But lawmakers fear that the sentiment of a dysfunctional federal government could solidify and prompt new fear in the global markets.

After the summer-long battle over lifting the debt ceiling, Standard & Poor’s downgraded U.S. debt based on “America’s governance and policymaking becoming less stable, less effective.” The supercommittee gridlock came despite its unprecedented parliamentary power — any plan winning at least seven votes would have been guaranteed a straight up-or-down vote in the House and Senate before Christmas.

“There is a real threat that not only will there be a downgrade,” Kerry said, “but that the market on Monday will look 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.”

Staff writers William Branigin, David A. Fahrenthold and Felicia Sonmez contributed to this report.