Debt supercommittee live: deficit talks close to failure


• Supercommittee fails to reach deficit reduction deal
• Obama threatens to veto attempts to reverse automatic cuts
• Committee members look to Congress to solve debt issue
• Read the committee’s full statement
• Read a summary of all today’s activity

Good morning: Trenchant opposition from Republican Senator Jon Kyl has ended hopes of a deal to shrink the US budget deficit by $1.2tn, with the congressional supercommittee reporting that its talks have ended in stalemate – triggering automatic cuts in defence spending.

A detailed account of the supercommittee’s failure in the New York Times places the blame on Arizona Senator Jon Kyl:

Democrats felt particularly aggrieved by Senator Jon Kyl of Arizona, the second-ranking Senate Republican, citing him as the main obstacle to an agreement. Democrats spoke of Mr Kyl as if he were an angry father arriving home to realize the children were having a party, and shutting the whole thing down. “While Kyl is in the group, it sure seems that nothing will happen,” said a Democrat close to the negotiations.

But Republicans also point the finger at Democratic members making public statements while failing to take part in the committee’s deliberations.

But with two days still remaining before the final deadline for a deal on Wednesday night, the admission of failure with time still on the clock seems only to confirm public discontent with Congress.

The accusations and counter-accusations will continue throughout the day as Congress convenes – follow all the action here live, as Republican presidential candidates start to weigh in and attempt to pin the blame on the White House.

10.10am: Reacting to the accusations in the New York Times that he was the deal wrecker, Senator Jon Kyl was quick to appear on Fox News and attempt to deny the charges of obstruction:

Ha, I don’t know where they get that. [Members of the supercommittee] have talked throughout this process and a lot of ideas have come up. I hope that there is some sense that all of the members of the committee have worked very, very hard, and I think that’s a characterization that would be very unfair for any of the members of the committee.

On the other hand, Kyl also admitted that there was little hope for a deal in the time remaining: “I wouldn’t be optimistic. I don’t want to create any false hope here.”

10.22am: Senator Jon Kyl has been up early, doing the rounds of the TV studios to push back against claims that he derailed the supercommittee.

The Hill reports that Kyl also popped up on business channel CNBC:

Kyl said on CNBC that the real problem was that incentives were aligned for the Democrats to avoid compromise. Failure, Kyle noted, would lead to ” the biggest tax hike in the history of the country” when the Bush tax cuts expire in 2013, automatic cuts to “their favorite program, namely national defense,” and the campaign advantage that “the president gets to keep his message there’s a dysfunctional Congress.”

“The incentives probably did not align as we thought they might… once the other side made the calculation that they needed someone to blame because there wasn’t time to make the economy better,” Kyl said.

10.30am: So with time still remaining, what can we expect today from the supercommittee? All the talk aside, the committee’s co-chairs are to issue a statement this afternoon explaining the failure. But don’t hold your breath.

10.41am: Democratic supercommittee member John Kerry is also doing the rounds of the TV news channels – and the bloggers at Think Progress notes that Kerry is blaming Grover Norquist, the head of Americans for Tax Reform who badgers Republican candidates into signing a no-tax-increases pledge, for the Republican roadblock on raising revenues to cut the deficit:

Unfortunately, this thing about the Bush tax cuts and the pledge to Grover Norquist keeps coming up. Grover Norquist has been the 13th member of this committee without being there. I can’t tell you how many times we hear about ‘the pledge, the pledge.’ Well all of us took a pledge to uphold the Constitution and to full and faithfully and well-execute our duties and I think that requires us to try and reach an agreement.

10.55am: Jon Kyl isn’t the only one getting blamed for thr supercommittee fiasco. For those of you not familiar with Grover Norquist, he’s a seminal figure on the right of the modern Republican party and has spent two decades getting politicians to sign a pledge to fight any and all tax increases.

The FT details Norquist’s influence (if you can get past its paywall) on the supercommittee proceedings:

Senator Patty Murray, the Democrat co-chair of the committee, said Republicans had constantly cited Mr Norquist’s ‘Taxpayer Protection Pledge’ for their refusal to consider higher taxes.

“His name has come up in meetings time and time again,” she told CNN, the broadcaster, saying Republicans were “more in thrall” to a conservative lobbyist than the needs of the rest of the country.

Some fellow Republicans are also angry. Alan Simpson, who co-headed a bipartisan deficit commission, said Mr Norquist was either a “megalomaniac” or “egomaniac”.

“He ought to run for president, because that will be his platform, ‘No new taxes even if your country goes to hell,’ ” he told 60 Minutes for a programme devoted to Mr Norquist on Sunday.

With perfect timing, CBS’s news magazine 60 Minutes did a profile of Norquist and the GOP on Sunday. It’s very good.

11.06am: There is to be a joint statement from the supercommittee co-chairs later this afternoon – when exactly we don’t know – but the word is that it’s contents are all about “smoothing the pillow of a dying creature” according to a source on the Hill.

Now that’s a delightful image. The point being, all that’s left now is a dignified exit from the funeral.

11.20am: Washington Post blogger Greg Sargent goes nuclear over the supercommittee breakdown:

Here’s why the supercommittee is failing, in one sentence: Democrats wanted the rich to pay more in taxes towards deficit reduction, and Republicans wanted the rich to pay less in taxes towards deficit reduction.

Any news outlet that doesn’t convey this basic fact to readers and viewers with total clarity is obscuring, rather than illuminating, what actually happened here.

Snappy but is that true? It’s not clear that it is, especially since the Republicans would have been happy to have made the cut in the deficit entirely in spending cuts.

11.30am: Larry Sabato, the political guru from the University of Virginia, tweets an acid take on the failure of Congress’s supercommittee:

Having achieved next to nothing, this Congress has decided its one obtainable niche in history is the lowest popularity ever – 0%.

12 noon: With the supercommittee dead or dying, attention now moves to the “automatic cuts” to be triggered by the terms of the deal struck by Congress during the debt ceiling showdown in August – which is the reason why we are all here to begin with.

Now some in Congress are talking about undoing the automatic cuts – leading Jared Bernstein, a former economist at the White House, to look at what it means:

Now that the supercommittee seems to have gridlocked, we default to the automatic cuts – the sequester. The fact that these are split evenly between defense and non-defense has some members of Congress talking about “reconfiguring” the deal to take less from defense, and implicitly more from non-defense spending (entitlements are largely exempted from the sequester).

This is pure bait and switch. I’m sorry they don’t like the deal they cooked up to get out of the debt-ceiling mess they created. I’m not a big fan either. But the trigger was structured as tough on defense to make it something they’d want to avoid. And let’s remember: the $900bn of cuts already on the books came exclusively from the non-defense part of the budget from important programs that are already strained – Head Start, child care, education, infrastructure, R&D and more.

12.18pm: Meanwhile, New York magazine has a blockbuster profile of Arianna Huffington – sample quote: “Huffington, who, on the one hand, serves as a glittery Earth Mother and, on the other, is the world’s best bullshit artist” – which includes a hint that she could vote for a Republican candidate in 2012:

Huffington says now that she is disappointed in Obama and could even see herself voting Republican in the next presidential election. “To me,” she says, “the issues are more important than the party.” She pauses. “Trust me, I realize how hard it is to change the system, but Obama has demonstrated only the fierce urgency of sometime later, and at the same time the middle class is under assault” – she smiles – “which is of course the topic of my last book.”

12.36pm: Republican presidential contender Mitt Romney wasted no time in pinning blame for the supercommittee’s failure on President Obama:

I find extraordinary that there would be set up a committee with such an important mission as finding a way to provide fiscal sanity in America and with the penalty if that fiscal sanity is not found of a $600 billion cut to our military.

I would have anticipated that the president of the United States would have spent every day and many nights working with members of the Super Committee trying to find a way to bridge the gap, but instead he’s been out doing other things – campaigning and blaming and traveling. This is, in my view, inexcusable.

So it’s “inexcusable” for Obama to attend an Apec summit – one that was being hosted in the US? Inexcusable to meet with the president of China? According to Mitt, yes.

12.44pm: Is it really all over bar the shouting? Cox Media’s Jamie Dupree sees something going on involving supercommittee members:

IT’S NOT DEAD YET: This Super Committee rump group involves both parties; still trying to find a way to a deal

Yikes. Meanwhile, Dupree has many numbers in this post about the effects of budget cuts that will take place automatically if there is indeed no supercommittee deal.

1.08pm: Speaking to the White House press corp just now, press secretary Jay Carney says the Republicans “walked away” from a deal to shrink the deficit.

1.21pm: A new poll on US public opinion and media consumption from Fairleigh Dickinson University finds that watching Fox News appears to bad for you.

According to the poll, which you can read here in pdf format, “people who watch Fox News … are 18-points less likely to know that Egyptians overthrew their government than those who watch no news at all (after controlling for other news sources, partisanship, education and other demographic factors). Fox News watchers are also 6-points less likely to know that Syrians have not yet overthrown their government than those who watch no news.”

Dan Cassino, a professor of political science at Fairleigh Dickinson, comments:

[T]he results show us that there is something about watching Fox News that leads people to do worse on these questions than those who don’t watch any news at all.

In contrast, reading the USA Today or the New York Times appears to make you smarter.

1.40pm: More from Jay Carney’s White House press briefing today, after Carney was asked to react to the supercommittee’s failure – and specifically why the president and the White House did not become more engaged in the committee’s negotiations:

The president at the beginning of the process – at the beginning of the supercommittee process, a committee established by an act of Congress, put forward a comprehensive proposal that went well beyond the $1.2tn mandated by that act and was a balanced approach to deficit reduction and getting our long-term debt under control.

That has been available to the committee since it first started meeting and is available today, with the waning hours left to it to act, as a road map to how you achieve the kind of balanced approach that Americans demand.

This committee was established by an act of Congress. It was comprised of members of Congress. Instead of pointing fingers and playing the blame game, Congress should act, fulfill its responsibility.

As for the sequester, it was designed, again, in this act of Congress, voted on by members of both parties and signed into law by this president, specifically to be onerous, to hold Congress’ feet to the fire.

It was designed so that it never came to pass. Because Congress, understanding the consequences of failure, understanding the consequences of inaction, the consequences of being unwilling to take a balanced approach, were so dire.

Now, let me just say that the Congress still has within its capacity to be responsible and act. [T]he sequester doesn’t take effect for a year. Congress could still act and has plenty of time to act. And we call on Congress to fulfill its responsibility.

2.05pm: Nobody is happy about the supercommittee failure, even Traxis Partners hedge fund tycoon Barton Biggs, who tells the FT:

I think it’s pathetic that they haven’t been able to come to a deal. It shows our political system is really dysfunctional. I’ve been wrong in being too optimistic about the outcome in the US.

When even Wall St billionaires don’t like this outcome you know something has gone terribly wrong.

2.30pm: So now there seems to be some kind of super-supercommittee still holding talks today. Lisa Desjardins of CNN reports: “Meeting of 7 members broke up. [Senator Max] Baucus confirmed there’s a new tax idea on table.”

2.41pm: With the Iowa caucuses just 42 days away, the outcome is still up in the air. Here is the single most interesting analysis of the state of the Republican campaign in Iowa, by Jennifer Jacobs of the Des Moines Register:

The size of campaign staffs organizing in Iowa is smaller this election cycle across the board than four years ago.

On the Democrats’ side, Barack Obama had 145 paid employees here as of September 2007, while John Edwards had 130 and Hillary Clinton had 117.

For the Republicans, Romney had the biggest team with 67 people. Next were the Rudy Giuliani and Fred Thompson campaigns, with 12 each.

This cycle, Michele Bachmann and Rick Perry have the beefiest of the bunch with 11 paid staffers each. Santorum nine; Romney, five; Herman Cain, four; and Newt Gingrich, two. Paul’s aides declined to disclose the latest numbers, but he had at least six in September, campaign disclosure reports show.

Competing in caucuses consume a lot of human resources – organising precinct captains, getting supporters to the sites – that outstrip a conventional ballot-based election.

3.03pm: Jay Carney had to deal with an unusual attack on America’s fiscal position from the German media during today’s White House press briefing:

Question: The US, as far as I know, has the worst debt-to-GDP ratio as the whole eurozone. We are talking about the eurozone, not about the United States. But Congress can’t get its act together.

So from the European perspective, it seems that this country is in a bigger mess than Europe. We are not proud where we are. We know that it’s slow and not bold and so on, but at least they are doing something. They’re deciding something to try to pull us through. And here nothing is happening [inaudible].

Carney: Well, again, I don’t think it’s helpful to get into which side of the Atlantic handles its problems better or worse.

Hey, why should Europe be the only economy to benefit from German advice?

3.20pm: It’s about time that the contrary, silver-lining pieces start hitting the pixels. First out of the gate is Jonathan Chait in New York magazine explaining why the failure of the supercommittee was actually a Good Thing because…

The supercommittee was the way out. It forced Congress to agree to $1.2tn in deficit reduction, or else automatic budget cuts would go into effect. But the key detail was that the budget cuts would not happen until 2013. Meanwhile, the debt ceiling would be lifted through the 2012 election. Between now and then, the two parties can fight over what to do about the automatic budget cuts scheduled to take effect. That’s not really the important thing. The important thing is that the debt ceiling is no longer on the table.

I can see the rationale here but the problem is that the automatic cuts are not set in stone. They can be unravalled by Congress and then nothing has changed – except that yes, the Republicans can’t try and trip up Obama over the deficit ceiling again.

3.30pm: Rick Perry knows whose fault the supercommittee failure is:

Ultimately, responsibility for this failure lays at President Obama’s feet. The whole reason a supercommittee was created was because the President wasn’t willing to lead, wasn’t willing to even put on paper his plans for cutting spending. It’s amazing to what lengths he will go to avoid making tough decisions. And who pays the price for Washington’s failure? The American people and our military personnel, who will now be subjected to a half trillion dollars in national defense cuts?

Cheap joke: there were two other people to blame but Perry couldn’t remember who they were.

4pm: Republican presidential contender Mitt Romney gets a profile in People magazine – proving that he’s moved into the big leagues. In which he admits to trying crack cocaine and … no, beer and cigarettes. Once. The interview is in the 5 December issue but here’s the exciting part:

People: Have you ever had a beer?

Romney: Never had drinks or tobacco. It’s a religious thing. I tasted a beer and tried a cigarette once, as a wayward teenager, and never did it again.

Let’s assume that “wayward teenager” line is part of the RomneyBot 3000′s humour software.

4.19pm: Poetic justice, reports AP:

A New York law firm that specializes in foreclosures and was criticised for a Halloween party that mocked the homeless will close, a spokesman said Monday.

Steven J Baum PC, one of the largest-volume mortgage foreclosure firms in New York, filed notice of mass layoffs with the state Department of Labor and local officials, indicating at least a third of its employees would lose their jobs. On Monday, spokesman Earl Wells III confirmed the law firm would close altogether.

While it had been on the radar of federal and state investigators for some time, the Baum firm became the target of widespread public ire last month after The New York Times published pictures from its 2010 Halloween party, which showed people dressed to look homeless and part of the office decorated to resemble a row of foreclosed homes.

One person had a sign around her neck that read: “3rd party squatter. I lost my home and I was never served,” apparently mocking the explanation of some homeowners facing foreclosure proceedings. The Times said the pictures were provided by a former employee.

4.33pm: A statement from the supercommittee coming shortly… it’s not looking good.

4.48pm: The full statement from the supercommittee co-chairs Senator Patty Murray and Representative Jeb Hensarling reads:

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.

Despite our inability to bridge the committee’s significant differences, we end this process united in our belief that the nation’s fiscal crisis must be addressed and that we cannot leave it for the next generation to solve. 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.

We are deeply disappointed that we have been unable to come to a bipartisan deficit reduction agreement, but as we approach the uniquely American holiday of Thanksgiving, we want to express our appreciation to every member of this committee, each of whom came into the process committed to achieving a solution that has eluded many groups before us. Most importantly, we want to thank the American people for sharing thoughts and ideas and for providing support and good will as we worked to accomplish this difficult task.

We would also like to thank our committee staff, in particular Staff Director Mark Prater and Deputy Staff Director Sarah Kuehl, as well as each committee member’s staff for the tremendous work they contributed to this effort. We would also like to express our sincere gratitude to Dr Douglas Elmendorf and Mr Thomas Barthold and their teams at the Congressional Budget Office and Joint Committee on Taxation, respectively, for the technical support they provided to the committee and its members.

So in a reverse of the usual transformation, the supercommittee went into a phone booth and came out as a weakling wearing glasses.

5pm: What happens next? Well, members of Congress get away in good time for Thanksgiving – and cynics might say that’s why the admission of failure comes today rather than on Wednesday night. But the Associated Press lays it out in more detail:

But the big federal deficit reductions that are to be triggered by Monday’s supercommittee collapse wouldn’t kick in until January 2013. And that allows plenty of time for lawmakers to try to rework the cuts or hope that a new post-election cast of characters – possibly a different president – will reverse them.

Congress’ defense hawks will be leading the charge, arguing that the debt accord reached by President Barack Obama and congressional Republicans last summer already inflicted enough damage on the military budget. That agreement set in motion some $450 billion in cuts to future Pentagon accounts over the next decade.

The supercommittee’s failure to produce a deficit-cutting plan of at least $1.2 trillion after two months of work is supposed to activate the further, automatic cuts, half from domestic programs, half from defense. Combined with the current reductions, the Pentagon would be looking at nearly $1 trillion in cuts to projected spending over 10 years.

5.08pm: In a sign that the automatic cuts might not stick, Republican Representative Howard McKeon, the chairman of the House Armed Services Committee, says he’s ready to try and roll back the deep cuts now aimed at the military budget:

I will be introducing legislation in the coming days to prevent cuts that will do catastrophic damage to our men and women in uniform and our national security. Our military has already contributed nearly half a trillion to deficit reduction.

5.14pm: Senate majority leader Harry Reid appears to be hanging tough on any attempts to repeal the automatic cuts: “Without a balanced plan that would reduce the deficit by at least as much, I will oppose any efforts to change or roll back the sequester.”

5.24pm: President Obama is to make a statement to reporters later this evening – 5.45pm ET – in the wake of the supercommittee failure.

5.28pm: My colleague Dominic Rushe points out the minor irony of the supercommittee statement: “we end this process united in our belief that the nation’s fiscal crisis must be addressed” – just not by the current supercommittee.

5.32pm: According to CNBC, ratings agency Standard & Poors has said that the supercommittee failure will not affect the US’s credit rating.

5.46pm: This is Matt Wells taking over from Richard Adams.

5.49pm: Obama is now speaking at the White House. He says the “balanced approach” to reducing at the deficit. has broad support, including among economists and the public. “There are too many Republicans in Congress who have refused to listen to the voices of reason,” he says.

The position is different from August, Obama adds. The US is not about to default on its deficit. Plans to cut the deficit are already locked in – at least $2.2tn in the next ten years “one way or another”. The president says it would be preferable to cut “with a scalpel, not with a hatchet”.

To those on Congress who are trying to undo the automatic cuts that kick in, now that the supercommittee has failed: “My message to them is simple: No,” he says. Obama says he will veto any attempt to roll back on the sequester. “Congress must get back to work,” he says. There are “no easy off ramps,” he says.

5.52pm: The key point to stress from Obama’s statement is that he will veto any attempt by Congress to undo the automatic cuts that are due to take effect in 2013.

5.53pm: The anti-tax lobbyist Grover Norquist is on CNN now. He denies he’s to blame for the supercommittee’s failure, unsurprisingly.

6.10pm: Speaking of Norquist, our correspondent Ewen MacAskill has put together this profile of the man described by Newt Gingrich as “the single most effective conservative activist in the country”.

6.14pm: The AFL-CIO, the biggest trade union grouping in the United States, has released its reaction to the failure to reach a deficit deal. No surprise which side its president, Richard Trumka, comes down on.

Republicans on the Super Committee have once again shown that if they can’t get their way, they take their marbles and go home. “Getting their way” means making the Bush tax cuts for the wealthy permanent, letting the top 1% off the hook on deficit reduction. “Getting their way” means driving the economy further into a ditch — letting Wall Street run amok, refusing to take responsibility for their actions, and blaming everyone else. This, in a nutshell, is how our economy got broken in the first place.

If we want to fix our economy and put America back to work, we have to start focusing on the 99 percent, not the 1%. Now is the time to start investing in infrastructure that puts people to work right away while laying the groundwork for broadly shared prosperity in the long term. And we have to defend and strengthen the Social Security, Medicaid, unemployment, and Medicare benefits that the 99% depend on. The last thing we should do is make the Bush tax cuts for the wealthy permanent.

6.31pm: The Guardian’s Ana Marie Cox wonders who to blame for the deficit growth and tax cut mania:

The Democrats are not without fault, though honestly, I’m having trouble coming up with something specific beyond how they ceded so much ground to Republicans when Republican ideas were popular. The good news for them (and us!), now, is that Republican ideas aren’t popular.

This is Richard Adams again, taking over from Matt Wells.

6.45pm: The Los Angeles Times excellent Washington team has a very good round-up of all the political reaction to the supercommittee’s collapse – including this quote from Obama in his statement tonight:

There are still too many Republicans in Congress who have refused to listen to the voices of reason and compromise that are coming from outside of Washington.

Undoubtedly, Obama’s most important comment was this one: “I will veto any effort to get rid of those automatic spending cuts.” That’s quite a line in the sand.

6.50pm: The Guardian’s Ewen MacAskill files his main piece on the fallout from the failure of the supercommittee:

Obama, speaking at the press conference, told them that he was prepared to again try to reach a compromise with them. He said he would not allow them to circumvent the automatic trigger and would veto any such proposals coming from them.

“I will veto any effort to get rid of automatic spending cuts… There will be no easy off ramps on this one,” Obama said. It is extremely rare for Obama to threaten to use his veto.

The failure of the supercommittee, made up of six Republicans and six Democrats, had been expected for days. The committee met for a final time on Monday afternoon in a desperate hunt for a last-minute deal but it was too late.

7pm: In retrospect it seems that a supercomittee failure was always on the cards, given the lack of a really hard deadline to force Congress into action.

Without any room for bipartisan dealing as a presidential election loomed, the chances of a serious deal was always going to be difficult – and so it proved to be, too difficult.

Here’s a summary of the day’s events:

The congressional supercommittee empowered to reduce the US federal budget deficit by $1.2tn admitted failure today after weeks of negotiation failed to produce a deal between the Republicans and Democrats on the committee

The supercommittee’s co-chairs made a public admission of defeat in a statement on Monday evening, more than two days before the final deadline for the committee was to recommend spending cuts and revenue increases to meet the $1.2tn target

The statement said in part: “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”

Democrats and Republicans traded blame for the supercommittee’s failure, with Democrats saying the Republican members were pressured not to allow any significant tax or revenue increases to help close the deficit

The collapse of the supercommittee structure means that automatic spending cuts of $1.2tn will now kick-in, including reductions in military spending, under legislation passed during August’s debt ceiling deal

Several members of Congress vowed to rewrite the spending cuts – but in a statement this evening after the supercommittee’s failure was made official President Obama vowed to veto any attempts to discard the automatic cuts

The US stock markets fell over the day’s trading, with analysts saying the supercommittee’s failure was weighing down sentiment. But ratings agency S&P denied that the US credit rating would be downgraded as a result.

guardian.co.uk

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