Published 22 Nov, 2011
Congressional intransigence appears to be at an all time high as the Joint Select Committee on Deficit Reduction, more commonly known as the ‘Super Committee’, failed to move forth any plans for reducing the debt and deficit. Assembled by Congress after the debt limit debacle in August, the committee was tasked with fixing the Nation’s balance sheets, but as a result of Republicans’ unwillingness to compromise on anything the committee announced Monday morning, (11/21/11) it officially failed in finding cuts. “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,” co-chairmen Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Texas) said. “Despite our inability to bridge the committee’s significant difference … we remain hopeful that Congress can build on this committee’s work and can find a way to tackle this issue in a way that works for the American people and our economy.”
What does this mean? Markets around the world braced for the failure in advance and most markets were down as a result. News of a downgrade like the one that happened to the US earlier this summer was downplayed, although not entirely ruled out if cuts are not found soon. Immediately scheduled to happen under the sequester or, “legislative mechanism that will force automatic cuts in defense and domestic programs,” are $1.2 trillion of automatic across-the-board spending cuts that will kick-in on October 1, 2012. The Pentagon budget faces the steepest of cuts at $600 billion in mandatory reductions over nine years. President Obama has made it clear that he will veto any effort from Congress to undo the sequester that was agreed to in the summer, while Republicans are clamoring to recall the cuts to the Pentagon. It remains to be seen what programs will be cut, but there is little doubt that the cuts will affect working families and retirees the most.
While both sides of the committee were quick to point fingers and lay blame on the other side, it is evident that Republicans refused to budge on ideological terms, rebuffing efforts to negotiate tax increases on the wealthy and insisting on privatizing Medicare. Additionally, Republicans refused to budge on the Bush era tax cuts, insisting that they stay in place even for those wealthiest Americans making the most amount of money.
Another thing to keep an eye on is the expiration of the payroll tax holiday and unemployment benefits that are set to expire at the end of the year. As a result of the super committee failure there is no budget, and as a result UI and the tax holiday may not be renewed. According to the Tax Policy Center the payroll tax holiday saved American Households more than $900 this year. At a time when money is tight for families across the country, the expiration could be a serious blow to the economy and working families. Moreover, unemployment benefits are essential in keeping the economy moving and middle class families on their feet as so many across the country struggle to find work.