Panel Fails to Reach Deal on Plan for Deficit Reduction
Published: November 21, 2011 - New York Times
WASHINGTON — Leaders of the Congressional committee charged with finding at
least $1.2 trillion in deficit reductions conceded on Monday that panel members
had failed, setting up what is likely to be a yearlong political fight over the
automatic cuts to a broad range of military and domestic programs that would go
into effect starting in 2013 as a result of their inability to reach a deal.
Speaking an hour after the committee’s failure was announced by its leaders
in an e-mail statement, President Obama promised to veto any legislation that
seeks to avoid the automatic cuts. The president also pledged that “one way or
another” the deficit would be trimmed by at least $2.2 trillion, the only
question being whether it was with a “scalpel, not a hatchet.”
“There will be no easy off-ramps on this one,” Mr. Obama said. His reference
to $2.2 trillion includes $1 trillion in savings that both parties agreed to in
August.
The committee’s failure appeared to alarm some state officials. In New York,
Gov. Andrew M. Cuomo held a conference call with his Council of Economic and
Fiscal Advisors to discuss the impact on the state, which he said “could lose
approximately $5 billion in federal funding over 10 years beginning this coming
fiscal year.”
The panel’s demise followed more than 10 weeks of bitter partisan division
that seemed to seal the image of Congress, and all of Washington, as a place
where nothing can be accomplished, even when the consequences of failure are
clearly visible to the American people and abhorrent to both political parties.
In a statement, the panel’s leaders, Representative Jeb Hensarling,
Republican of Texas, and Senator Patty Murray, Democrat of Washington, said,
“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 statement left open the possibility of a new stage of negotiations in the
full Congress, where lawmakers will try to hammer out an agreement on a tax
overhaul, changes to entitlement programs and new revenues as a way to avoid
automatic across-the-board cuts over 10 years. “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,” it said.
Short-term matters, like the expiration at the end of this year of a payroll
tax cut and jobless benefits for the long-term unemployed, will most likely be
dealt with in stand-alone legislation or as bill amendments next month. But
given the depth of the divisions between the parties, there is no guarantee of
an agreement.
And a meeting of the minds on two central points — the scheduled expiration
of the Bush
tax cuts, which Republicans oppose, and scaling back entitlement programs,
which Republicans accuse Democrats of having approached too modestly — seemed on
Monday like a mirage.
Democrats in the Senate said they planned to use the Bush tax cuts, which
expire at the end of next year, as leverage in future attempts to avoid large
cuts to the budget.
Many Republicans said they would try to find a way to spare at least some of
the automatic $500 billion in reductions to the Pentagon budget over the next 10
years. Representative Howard P. McKeon, chairman of the House Armed Services
Committee, said on Monday that he would soon introduce legislation “to prevent
cuts that will do catastrophic damage to our men and women in uniform and our
national security.”
Defense Secretary Leon E. Panetta has said the cuts would result in “the
smallest ground force since 1940, the smallest number of ships since 1915 and
the smallest Air Force in its history.” He also raised the specter of deep cuts
to America’s nuclear arsenal.
Independent analysts of the military budget said that the situation was not
as dire as Mr. Panetta described, but that the cuts, which by law cannot be
“backloaded” to leave the biggest reductions for later years, would put a large
strain on the Pentagon.
Mr. Obama’s potential Republican rivals wasted no time framing the failure of
the committee, whose talks he was almost completely absent from, as the
president’s failure. At a campaign stop in New Hampshire on Monday, Mitt Romney
said the most disappointing aspect of the panel’s failure was “that our
president has had no involvement with the process.” In a speech Monday, Newt
Gingrich, another Republican candidate for president, called the failure of the
committee “good for America.”
It was a view Mr. Obama vigorously disputed. The president noted pointedly
after the talks failed that he had sent Congress his proposal to trim the
deficit. “It’s a plan that would reduce the deficit by an additional $3
trillion, by cutting spending, slowing the growth of Medicare
and Medicaid
and asking the wealthiest Americans to pay their fair share.”
Republicans, he said, “simply will not budge” from their refusal to consider
tax increases on the wealthy. “That refusal continues to be the main stumbling
block that has prevented Congress from reaching an agreement to reduce our
deficit.”
Obama administration officials say they believe that a majority of Americans
support the president’s proposals. A senior official on Monday night told
reporters that the administration believed that “at some point,” public pressure
would persuade Republican lawmakers to strike a deal.
Beyond that, Mr. Obama’s advisers say privately that they believe Republicans
have more to lose than Democrats if there is no deficit reduction deal in the
near term. “No one, I repeat, no one wants the trigger to go into effect,” an
administration official said Monday on the condition of anonymity. “But let’s
face it — those guys really don’t want it going into effect.”
Asked whether the official believed that the desire to protect the Pentagon
from big cuts would force the Republicans to compromise next year, the official
replied, “We’ll see.”
At a final meeting Monday, seven of the 12 committee members discussed a new
proposal from Senator John Kerry, Democrat of Massachusetts. Republicans left
early, their faces grim, their moods dark.
Mr. Kerry, walking later through the Russell Senate Office Building
surrounded by reporters, said his last-ditch plan would have created a procedure
for “expedited tax reform” next year, allowing the committee to defer decisions
about the fate of the tax cuts enacted in 2001 and 2003.
A Republican close to the negotiations saw it differently. “Kerry went
rogue,” he said, “and tried to float another iteration of a trillion-dollar tax
hike.”
Elisabeth Bumiller contributed reporting.