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Old 11-18-2011, 03:28 PM
 
Location: Vancouver, B.C., Canada
10,715 posts, read 22,339,583 times
Reputation: 5137

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WASHINGTON – A high-profile effort to trim stubborn U.S. budget deficits appeared near collapse on Friday as Democrats and Republicans were unable to agree on tax increases and benefit cuts.

A 12-member “super committee” in Congress has until midnight on Wednesday to strike a deal that would save at least US$1.2-trillion over 10 years. Members say they think a deal is still possible, but aides privately are more pessimistic
.
Friday is shaping up to be a make-or-break day, one super committee member said.

“We should know by end of today, and I’ll give myself until 11:59 p.m. (0459 GMT on Saturday), as to whether or not there will be a deal,” Democratic U.S. Representative Xavier Becerra said at a renewable-energy conference.
Congress is already facing rock-bottom approval ratings after a year of down-to-the-wire budget battles, and failure to reach a deal would likely incite further disgust among voters as the 2012 election season heats up.
Unlike budget standoffs in April and August, failure would not lead to a government shutdown or a sovereign debt default.

Instead, automatic spending cuts of US$1.2-trillion over 10 years, split evenly between military and domestic programs, would kick in starting in 2013.

Many Republicans, along with Defense Secretary Leon Panetta, warn that those cuts could compromise national security. Senator Pat Toomey, a leading Republican on the super committee, said on Thursday he would try to modify them, presumably to ease their impact on the military.

Programs for the poor and the elderly, such as Medicare and food stamps, would be largely shielded from the automatic cuts. Some liberal groups say they would be less painful than a deal that affects those programs and Democrats say the automatic cuts, known as a sequester, should stay in place.

“Trying to undo the sequester is a total shirking of responsibility,” Representative Chris Van Hollen, a top Democrat on the panel, told National Public Radio.

Democrats also believe they have an advantage because tax cuts enacted under President George W. Bush are due to expire at the end of 2012, and Republicans want to overhaul the tax code before then to avoid higher rates for the wealthy.

Toomey said on Friday a deal was still possible. “It’s not going to be easy,” he told CNN. “Time is running short but it hasn’t run out yet.”
But a senior Democratic aide said the two sides are nowhere near an agreement.

MARKET REACTION UNCLEAR
It’s not clear how investors would react to failure.

Markets plunged in August after a divisive battle over extending the government’s borrowing authority prompted ratings agency Standard & Poor’s to issue a first-ever U.S. debt downgrade. The other two major agencies have said they would not necessarily follow suit if the super committee deadlocks, as long as the automatic cuts are allowed to kick in.

Investor expectations are extremely low, which might limit the scope of market reaction. Most are distracted by the ongoing debt crisis in Europe, which may ensure a safe-haven bid for Treasury bonds and the dollar even if the committee fails to agree on substantive cuts.

However, the automatic cuts may be seen as another negative for the U.S. economy and could roil the stock market.

Failure to reach a deal also would make it harder for Congress to extend a range of provisions, from payroll tax cuts to enhanced unemployment benefits, due to expire at the end of the year. Economists warn that the economy could suffer if those measures are not kept in place.

There is a third option. Super committee members could set aside divisive issues like taxes and benefits and put together a much smaller package containing measures both sides easily can agree upon, such as selling off radio and television frequencies and cutting federal pensions and farm subsidies.

That would reduce the severity of the automatic spending cuts.
On Friday morning, super committee members emphasized their areas of disagreement even as they said a deal was possible.

Mr. Toomey warned that the tax increases the Democrats are seeking would hurt the fragile economic recovery.

“The real driver of this entire problem of course is excessive spending,” he said on CNN. “I’m not sure we should harm the economy in order to do the right thing for the entitlements.”

Mr. Van Hollen said Democrats would not accept the wholesale overhaul of Medicare and other benefit programs that Republicans want.
“What we will not do is end the Medicare guarantee,” he said.
U.S. deficit talks set to fail | Investing | Financial Post
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Old 11-18-2011, 03:29 PM
 
Location: Vancouver, B.C., Canada
10,715 posts, read 22,339,583 times
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The United States Congress is truly useless!
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Old 11-18-2011, 03:37 PM
 
Location: St. Joseph Area
6,237 posts, read 8,249,760 times
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Quote:
Originally Posted by GTOlover View Post
The United States Congress is truly useless!
All of this is making me increasingly supportive of a Parliamentary System. Not so much gridlock that way.
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Old 11-18-2011, 03:39 PM
 
Location: Great State of Texas
86,093 posts, read 69,914,204 times
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Are you surprised at all ? How many "committees" have we had so far ?
If they didn't collapse then whatever came out of them got rejected.

Face it..there's lots of TALK on what they want to do but when something is presented then either one side or the other rejects it. I don't think either side wants any cuts. They have no problem spending though but mention CUTS (a 4 letter word BTW) and fingers start flying that "the other guy is blocking it, not my side."
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Old 11-18-2011, 03:40 PM
 
2,921 posts, read 5,119,319 times
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The best option for the budget ironically is to let it fail. 600 billion in defense cuts and lets the bush tax cuts expire.
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Old 11-18-2011, 03:41 PM
 
29,988 posts, read 35,869,055 times
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Quote:
Originally Posted by GTOlover View Post
The United States Congress is truly useless!
Congress and POTUS alike. A failure of leadership in placing the country above themselves and re-election.
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Old 11-18-2011, 03:43 PM
 
29,988 posts, read 35,869,055 times
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Quote:
Originally Posted by Majin View Post
The best option for the budget ironically is to let it fail. 600 billion in defense cuts and lets the bush tax cuts expire.
Meanwhile the entitlement class just keeps leaching and leaching and leaching off the producers/taxpayers.
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Old 11-18-2011, 03:46 PM
 
Location: Charlotte
12,646 posts, read 13,617,951 times
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Why is everyone so gloomy...

The Congress is functioning exactly as the Tea Party Republicans wanted.
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Old 11-18-2011, 03:59 PM
 
Location: Toronto, ON
2,333 posts, read 2,443,166 times
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Quote:
Originally Posted by GTOlover View Post
The United States Congress is truly useless!

The congress: is it useless for the purpose of the constitution, or is it's constitution incidentally not valuable to the will of the people as they are. Too much in the people wishes the constitution to determine some kind of Moral.
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Old 11-18-2011, 04:48 PM
 
2,633 posts, read 2,964,024 times
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News-break: This committee is supposed to fail. The real deal was made when they created the "triggers" if the committee couldn't come to agreement. Democrats realize that spending needs to come down, Republicans realize that there needs to be an increase in revenue. The problem is how do you sell this to the extremes in both parties going into a national election cycle? This committee solves some sticky problems for the politicians: it makes it look like they're trying to do something, it lets them grandstand to their respective special interests, it will let them blame the other side when it fails.

How will the markets respond? They will love it if the committee fails. It will lead to real changes in spending and revenues. Going into 2013, Congress will be even less able to make significant changes since they will be in full campaign mode. Expect to see a lot of current congressmen announce their retirement so that they won't have to deal with cutting spending in the next congressional cycle.
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