$1.2 trillion in automatic cuts will be triggered in January 2013, including military spending.
The bipartisan congressional committee tasked with finding at least $1.2 trillion in deficit reduction announced on Monday it cannot reach agreement by the Wednesday deadline, a stark if not unexpected admission that its efforts have ended in failure. "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-chairs, Rep. Jeb Hensarling, R-Texas, and Sen. Patty Murray, D-Wash., said. The declaration came late Monday afternoon in a written statement from the 12-member Joint Select Committee on Deficit Reduction despite last-second discussions in closed-door meetings. The committee, in the end, could not resolve that Republicans would not go as far as Democrats wanted on allowing more revenue raisers, and Democrats did not want to move on entitlement reforms. Intense messaging by both political parties on which was more to blame is surely to spill out for days, if not months. The super panel was created with extraordinary, fast-track powers this summer under the law agreed to by Republicans and Democrats during the debt ceiling crisis. That same law now says its failure will trigger $1.2 trillion in automatic cuts over 10 years, starting in 2013. That so-called sequestration is to include cuts to Pentagon spending.
There is a chance Congress will somehow try to alter these cuts, or even sidestep them. Some lawmakers were already saying they will immediately move legislation to block those automatic cuts to the defense budget.
But the nation's debt crisis will continue - with the deficit now at about $15 trillion. It also is likely no coincidence that the committee waited until the financial markets closed for the day to make the announcement. The Dow Jones industrial average had already tumbled by more than 300 points earlier in the day partly in anticipation of the acknowledgement of failure.
The lack of a super committee agreement also shifts concern to several important temporary tax breaks and other items set to expire at the end of December - matters that now likely must be addressed when Congress returns to Washington.
Among those are the AMT "patch" to prevent the alternative minimum tax, jobless benefits, and a payroll tax cut enacted last year that enables most Americans to keep an added 2 percent of their earnings. There also had been anticipation that a deal by the super committee would have included the so-called "doc-fix," the annual headache that Congress deals with to put off a planned cut in payments to Medicare doctors. If Congress doesn't act by January, doctors will be up for a 30 percent pay cut next year.
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