Super Committee Failure: Bush Tax Cuts Obstacle To Deal (UPDATE)
The leaders of a special deficit reduction panel signaled Sunday that they will fail to strike a deal to reduce the deficit before their Wednesday deadline.
Republican opposition to taxing the rich is the main obstacle, Sen. Patty Murray (D-Wash.) said on CNN's "State of the Union."
"There is one sticking divide, and that is the issue of what I call shared sacrifice, where everybody contributes in a very challenging time for our country," Murray said. "That's the Bush tax cuts. In making sure that any kind of package includes everybody coming to the table and the wealthiest of Americans, those who earn over a million dollars every year, have to share, too. And that line in the sand, we haven't seen any Republicans willing to cross yet."
Murray is the co-chair of the special panel assigned to strike a deficit deal by Thanksgiving to prevent huge automatic cuts. The failure of the 12-member super committee, as it's known, will supposedly result in $1.2 trillion worth of discretionary and military spending cuts. However, as HuffPost reported in September, Congress has plenty of time to intervene before the automatic cuts take effect in 2013.
Rep. Jeb Hensarling (R-Texas), Murray's Republican counterpart, was also a downer on Sunday morning.
"Nobody wants to give up hope. Reality is to some extent starting to overtake hope," Hensarling said on "Fox News Sunday." "Talks have taken place over the weekend and they will continue to take place. But the reality is we need to come to an agreement, we have to get it drafted, and we have to get an estimate from the Congressional Budget Office by the end of Monday. It is a daunting challenge."
Asked whether Democrats had budged on reforming entitlement programs or whether Republicans had budged on tax cuts, Hensarling said, "We'll not give up hope."
Repubicans reportedly put forward a token offer last week and Democrats rejected it. Rep. Xavier Becerra (D-Calif.), a member of the panel, said on Fox Sunday that changes to entitlement programs were "on the table." In particular, Becerra suggested openness by Democrats to raising the Medicare eligibility age, which is currently 65, and reducing cost-of-living adjustments for Social Security beneficiaries, though he said he opposed those options.
A big super committee deal would be a convenient way for Congress to reauthorize extended unemployment benefits and a payroll tax cut, both set to expire at the end of the year. Economists say the expiration of those items, which provided $300 a week to millions of jobless and $1,000 to most Americans, respectively, could reduce economic growth by 1.7 percentage points next year.
"2012 is shaping up to be a tough year because the super committee decided to punt," economist Mark Zandi said on Fox.
UPDATE (10:15 p.m.): Sources tell Reuters that the committee's top Republican and Democrat will declare on Monday that they have been unable to reach a deal.