WASHINGTON — The imminent collapse of a special deficit-reduction supercommittee on Monday promises to set off yet another round of the Washington blame game as the panel officially admits failure in its quest to sop up at least $1.2 trillion in government red ink over the coming decade.
The bipartisan 12-member panel is sputtering to a close after two months of talks in which key members and top congressional leaders never got close to bridging a fundamental divide over how much to raise taxes. The budget deficit forced the government to borrow 36 cents of every dollar it spent last year.
Several panel members attended a last-ditch meeting at midday and said there might be further sessions later. But there was no indication of a breakthrough, though panel members didn’t want to officially give up.
“Both sides are feeling angst and greater angst at the possibility of no agreement, and so they’re working harder, more creatively, to see what could be accomplished,” one panel member, Senate Finance Committee Chairman Max Baucus, Montana Democrat, said. “That’s happening on both sides.”
Congressional aides said they expected a formal statement within a few hours announcing the panel’s failure to reach a compromise.
In spite of agreement among Democrats and Republicans on the urgent need to address the nation’s spiraling debt problem — the national debt topped $15 trillion last week — Republicans and Democrats appeared to have never gotten particularly close, at least in the official exchanges of offers that were leaked to the media.
“There is one sticking divide. And that’s the issue of what I call shared sacrifice,” said panel co-chair Sen. Patty Murray, Washington Democrat, on CNN’s “State of the Union.”
“The wealthiest Americans who earn over a million a year have to share too. And that line in the sand, we haven’t seen Republicans willing to cross yet,” she said.
Republicans said Democrats’ demands on taxes were simply too great and weren’t accompanied by large enough proposals to curb the explosive growth of so-called entitlement programs like Medicare and Medicaid.
“If you look at the Democrats’ position it was ’We have to raise taxes. We have to pass this jobs bill, which is another almost half-trillion dollars. And we’re not excited about entitlement reform,’” countered Republican Sen. Jon Kyl of Arizona on NBC’s “Meet the Press.”
The White House, which assumed a hands-off posture as the negotiators struggled, said the all-but-disbanded committee should keep working.
“Instead of pointing fingers and playing the blame game, Congress should act, fulfill its responsibility,” White House press secretary Jay Carney said. Carney went on to blame Republicans for the impasse.
“In the end, it comes down to a decision by Republicans that they are unwilling to … ask the very wealthiest Americans, millionaires and billionaires, to pay a little bit extra so that we can achieve the kind of deficit reduction and long-term debt control that we need,” he added.
Monday is deadline day. The panel officially has until Wednesday to approve a deficit-slashing plan, but under its rules, any plan would have to be unveiled 48 hours in advance.
Instead, it appeared co-chairs Murray and Rep. Jeb Hensarling, Texas Republican, would issue a statement declaring the panel’s work at an end, aides said.
Failure by the panel would trigger about $1 trillion over nine years in automatic across-the-board spending cuts to a wide range of domestic programs and the Pentagon budget, starting in 2013, according to the Congressional Budget Office. This action, called a “sequester,” would also generate $169 billion in savings from lower interest costs on the national debt.
Defense Secretary Leon Panetta says the required cuts of up to $454 billion to the Pentagon would be “devastating” and leave a “hollow force.” Defense hawks of Capitol Hill promise they won’t allow them to be that deep. But that effort will be complicated by the insistence of other lawmakers that the overall amount of the budget cuts be left in place.
The panel’s failure also sets up a fight within a battle-weary, dysfunctional Congress over renewing a payroll tax cut and jobless benefits for the long-term unemployed, both of which are set to expire at the end of the year. Both proposals are part of President Barack Obama’s $447 billion jobs plan.
Extending the current 2 percentage point payroll tax cut isn’t a popular idea with many Republicans, but allowing it to expire could harm the economy, economists say. So too would a cutoff of unemployment benefits averaging about $300 a week to millions of people who have been out of work for more than six months.
Serious negotiations ended Friday after Democrats rejected a $644 billion offer comprising $543 billion in spending cuts, fees and other non-tax revenue, as well as $3 billion in tax revenue from closing a special tax break for corporate purchases of private jets. It also assumed $98 billion in reduced interest costs.
Earlier exchanges featured a more than $3 trillion plan from Democrats that would have increased tax revenues by $1.3 trillion in exchange for further cuts in agency budgets, a change in the measure used to calculate cost-of-living increases for Social Security beneficiaries, and curbs on the growth of Medicare and Medicaid.
“We put on the table a proposal that required tough compromises on both sides, and they never did that,” said Rep. Chris Van Hollen, Maryland Democrat, the only House Democrat on the panel to participate in late-stage bipartisan talks.
Republicans countered with a $1.5 trillion plan that included a potential breakthrough — $250 billion in higher taxes gleaned as Congress passes a future tax reform measure. The plan was trashed by Democrats, however, who said it would have lowered tax rates for the wealthy too far while eliminating tax breaks that chiefly benefit the middle class.
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