Absent a super committee, now who'll lean on Congress to cut US deficit?
Global markets or deadlines for extending tax breaks may yet force Congress to try again for a 'grand bargain' to shrink the US deficit. But big action before the 2012 election is unlikely.
Conceived in crisis, Congress's deficit-reduction "super committee" fizzled, without cutting a dime.Skip to next paragraph
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With the exception of a brief break in GOP ranks over opposition to tax hikes, the two parties remain deeply entrenched in old positions – and apparently see no reason to change, until after the 2012 elections.
But the enormity of America's fiscal crisis and two toxic political deadlines – the expiration of the Bush tax cuts and the onset of draconian automatic spending cuts – could give Congress the leverage for another shot at a grand bargain over taxes and spending.
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In a sense, every tax and spending decision from now through the 2012 election is a setup for that rare moment of political opportunity. But aside from the political calendar is the constant threat that financial markets may move faster, forcing Congress to react under the gun of a deeper crisis.
How we got here
Raising the national debt limit has always been a tough sell, especially for the party holding the White House. But this time, a new GOP House majority drew a line in the sand: No debt-limit increase without spending cuts of equal magnitude – and no tax hikes.
The standoff, which took the nation to the brink of default on Aug. 2, threatened "fiscal Armageddon," the White House said. Wall Street trembled. In the end, Congress and the White House agreed to raise the debt limit, including the creation of a joint congressional panel to come up with at least $1.2 trillion in additional deficit reduction – or, failing that, automatic spending cuts of the same magnitude in 2013.
"There may not be an issue of such gravity and magnitude, at least on the domestic side, that any Congress has faced in modern times," said Senate deputy leader Richard Durbin (D) of Illinois, at a rally on Nov. 16.
Why no reaction? Look at Europe.
Yet the failure of the 12-member super committee to agree to a plan to cut the deficit by $1.2 trillion – not even 3 percent of the $43.9 trillion that the United States is expected to spend over the next decade – barely stirred a reaction.
No fiscal Armageddon. No catastrophe. No flight from US Treasury bonds. Only a new round of partisan finger-pointing – and some recriminations within GOP ranks over lawmakers who even considered raising taxes as part of a deal.
The US national debt has now roared past $15 trillion, up from the $14.3 trillion breached on Aug. 2. The government still borrows nearly 40 cents for every dollar it spends. Soaring health-care costs still threaten to drown Washington in red ink.