Deficit "super committee" stalled as deadline looms
With a midnight Wednesday deadline fast approaching, the panel's six Republican and six Democratic members were still far apart on how to attain a goal of finding at least USD 1.2 trillion in budget savings over the next 10 years.
The Republican members held a Saturday morning conference call among themselves, but details about what was said on it were not immediately available, aides said.
Having rejected the latest Republican offer, the six Democrats were holding only private conversations this weekend, with no group meetings planned, aides said.
In a telling remark, Republican Senator Jon Kyl, asked by reporters on Saturday about the No. 1 point of compromise now, said, "Well, I'm not sure there is one."
At the same time, he said, "Nobody wants to quit until the stroke of midnight." Kyl is a super committee member.
The corridors of Congress were largely empty on Saturday. While most super committee members were in Washington, only Kyl was seen by reporters in his Capitol Hill office.
In marked contrast to the secrecy that has surrounded much of the committee's deliberations, six panel members were due to appear on Sunday television political talk shows. In recent days, both sides have engaged in a blame game, positioning themselves for the fallout that could result from failure.
The super committee was born out of last summer's bruising debt ceiling battle between Republicans and Democrats, which brought the world's biggest economy to the brink of default and cost it its AAA credit rating from Standard & Poor's.
Given unusual powers to tackle the US government's budget deficit and debt, which topped USD 15 trillion on Friday, the committee was seen by many as the best chance, in the near term, for the United States to get control of its deficits.
Market expectations low
Financial markets, focused on the European debt crisis, have low expectations for the panel. Some analysts are already looking beyond it to the year-end expiration of economic stimulus measures such as payroll tax cuts, fearing that the end of these could damage the fragile U.S. economic recovery.
Then there are the November 2012 elections and a battle over Bush administration tax cuts extended through 2012. Some analysts said partisan positioning ahead of those fights has undermined the super committee's efforts.
"There's still a chance of a deal, but nearly the entire Washington community is rooting for failure," said Jim Kessler, vice president for policy at Third Way, a centrist think tank.
A stock market rally could well result if the super committee defies the odds with a last-minute deal, but markets were unlikely to swoon if no pact emerges, analysts said.
Automatic budget cuts, evenly split between domestic and military spending, are due to kick in in 2013 if the committee fails to reach an agreement. But Congress could try to rework or undo the legislation mandating the cuts before then.
"It still seems mind-boggling that they could break up without doing anything. So I still think they'll get something – not USD 1.2 trillion, perhaps a deal around USD 700 billion," said Potomac Research policy analyst Greg Valliere.
No certain crisis
Unlike earlier budget standoffs, a failure next week would threaten neither a government shutdown nor a debt default.
The threat of automatic cuts has not been enough to jolt Republicans out of their opposition to new tax increases or Democrats out of their defense of spending for social programs such as Medicare, Medicaid and Social Security.
Driven skyward by deep tax cuts, two foreign wars, a financial crisis and the start of a severe recession, all during President George W. Bush's administration, the nation's debt has only expanded under President Barack Obama.
The annual budget deficit, pegged to be USD 1.3 trillion this year, has fallen slightly under Obama. But the tax code is still riddled with revenue-reducing loopholes and sharply higher Medicare spending looms ahead as the baby boom ages, painting a dire long-term US fiscal picture.
Markets and voters have grown increasingly frustrated by the inability of the Obama administration and a politically polarized Congress to take firm action. Public approval ratings for Congress are at rock-bottom levels.
Republican Senator Patrick Toomey, delivering his party's weekly radio address on Saturday, urged Democrats to help craft a deal and said it was still possible one could be achieved.
"The hour is late ... But I remain hopeful that we can meet our goal," Toomey said.
House of Representatives Speaker John Boehner, the top Republican in Congress, on Friday floated an offer to try to break the logjam. His plan would save USD 643 billion over 10 years, about half the panel's goal, but the two sides could not even agree on what was in the plan.