A member of the congressional supercommittee expressed doubt that the panel would reach an agreement on a U.S. deficit-reduction package by its Nov. 23 deadline.
Senator Jon Kyl, an Arizona Republican, called a slimmed-down debt plan rejected this past week by Democrats a “last-ditch” effort by his party to ensure the panel is able to “at least accomplish something and not come away with a goose egg.”
It’s too late for lawmakers to send new proposals to the Congressional Budget Office to be analyzed for their impact on the deficit, he told reporters yesterday.
Kyl said his colleagues hope that “even at this late date” the committee could put together ideas that had already been analyzed by the CBO. “I think that’s pretty doubtful at this point but obviously nobody wants to quit until the stroke of midnight,” he said.
The panel has been deadlocked over income-tax increases, with Republicans pushing to permanently extend President George W. Bush’s tax cuts, as well as to make cuts in politically sensitive entitlement programs such as Medicare.
The deadline for an agreement on how to carve $1.2 trillion out of the budget is Nov. 23, though under the rules a CBO cost estimate of any final plan must be publicly available 48 hours beforehand. There was little sign of urgency yesterday in the mostly empty Capitol. Democratic members of the supercommittee did not meet, while Republicans held a conference call.
Meanwhile, the Democratic Congressional Campaign Committee, charged with electing more Democrats to the U.S. House, fired off a fundraising appeal blasting Republicans on the supercommittee. “Republicans are insisting on eliminating the Medicare guarantee while cutting taxes for millionaires and refusing to include a robust jobs plan,” said the e-mail, which was attributed to House Minority Leader Nancy Pelosi. “That’s not fair,” she said. “Let’s seize this moment and show the world Democrats are strong and united,” she said.
Kyl said a pared back deficit-reduction proposal offered in the past week by Republicans was designed to break the stalemate by steering clear of politically sensitive programs such as Medicare and instead cut other, less controversial, types of mandatory spending.
“I thought maybe this last-ditch effort to focus just on savings that we had all pretty much agreed was possible might be a way to achieve, as I say, kind of a last-minute compromise,” Kyl said.
It would have cut $643 billion, according to a Republican aide, almost entirely by cutting spending though it would have raised taxes by $3 billion by ending a break for corporate jet travel. Democrats rejected the offer because it didn’t include enough revenue increases, according to a Democratic leadership aide. Both aides spoke on condition of anonymity because they weren’t authorized to discuss negotiations.
The plan is “unacceptable,” Democratic Senator John Kerry of Massachusetts said Nov. 18. Not requiring more taxes from high earners would be “unconscionable,” Kerry said. Senator Patty Murray, a Washington Democrat who co-chairs the panel, said Nov. 18 “where the divide is right now is on taxes, whether or not the wealthiest Americans should share in the sacrifice.”
Representative Dave Camp, a Michigan Republican and panel member, said Nov. 18 that Democrats “have not been willing to make the common-sense spending reductions we need to make but yet are continuing at the same time to insist on $1 trillion in job-killing tax increases.”
Failure by the supercommittee to agree on a plan by Nov. 23 could trigger automatic, across-the-board spending cuts of $1.2 trillion starting in January 2013. That process, called “sequestration,” is designed to spare the U.S. from another credit downgrade.
After Standard & Poor’s downgraded the U.S. AAA debt on Aug. 5, the government’s borrowing costs fell to record lows as Treasuries rallied. The yield on the benchmark 10-year Treasury note fell from 2.56 percent on Aug. 5 to below 1.72 percent on Sept. 22. The yield on the 10-year note was at 2.01 percent at 5:14 p.m. on Friday, Nov. 18, in New York, according to Bloomberg Bond Trader prices.
Some Democrats who represent districts with many elderly or low-income residents said sequestration is preferable to some options being considered by the supercommittee, such as cutting Medicare benefits.
“Sequestration is not the worst thing that could happen,” said Representative Keith Ellison, a Minnesota Democrat and co-chairman of the Congressional Progressive Caucus. “Getting a deal where there’s minimal revenue and all cuts on ordinary people, I’d rather see sequestration than that.”