The debt supercommittee on Monday announced its failure to reach even a minimal deal to reduce the deficit.
“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,” Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Texas), the co-chairmen of the supercommittee, said in a joint statement.
Many Republicans want to avoid those cuts, but President Obama announced Monday he would veto any attempt by Congress to prevent them.
“There will be no easy off-ramps on this one,” Obama said.
Each party sought to blame the other for the impasse even before the two chairmen officially threw in the towel less than an hour after financial markets closed.
Republicans focused their ire on Obama, who has increasingly sought to distance himself from Congress in an effort to secure his own reelection in 2012.
Obama was on a trip overseas last week as hopes for a supercommittee deal faded to black. Republican Senate Leader Mitch McConnell (Ky.) accused him earlier this month of rooting against a deal.
Even before Hensarling and Murray announced the failure, House Speaker John Boehner’s (R-Ohio) office had said in a memo that the supercommittee “was unable to reach agreement because President Obama and Washington Democrats insisted on dramatic tax hikes on American job creators, which would make our economy worse.”
Obama pinned the blame on the GOP, crediting Democrats for a willingness to consider cuts to Medicaid and Medicare and saying Republicans “simply will not budge from their position” on taxes, which he said was “the main stumbling block” to an agreement.
White House spokesman Jay Carney also lashed out at Congress and said it had failed at its responsibility.
“Congress assigned itself a job, assigned 12 of its own members a task, a task that wasn’t really that difficult to achieve,” Carney said at the White House daily briefing. “There wasn’t a seat at that table, as far as I’m aware, for a member of the administration.”
The 12-member supercommittee had until Monday night to send a package to the Congressional Budget Office to be scored ahead of a potential panel vote Wednesday. But a sharp partisan dispute over whether to raise taxes on the wealthiest Americans proved the dagger that killed any chance of agreement.
Republicans made an offer to raise $250 billion in new taxes, but as a condition would have lowered the tax rate on the wealthiest households from 36 percent to 28.
They also demanded larger benefit cuts in entitlement programs like Medicare and Medicaid than Democrats were willing to offer.
“For the good of our country, Democrats were prepared to strike a grand bargain that would make painful cuts while asking millionaires to pay their fair share, and we put our willingness on paper,” Senate Majority Leader Harry Reid (D-Nev.) said in a statement. “But Republicans never came close to meeting us halfway.”
Reid blamed the GOP’s unwillingness to ignore Grover Norquist and the Americans for Tax Reform pledge not to raise taxes, which most Republican lawmakers have taken.
Sen. Pat Toomey (R-Pa.), who authored the GOP’s deficit-reduction proposal, returned fire, saying Democrats “refused to agree to any meaningful deficit reduction without $1 trillion in job-crushing tax increases.”
Toomey said the panel had “an extraordinary opportunity” to create “millions of jobs through a reformed tax system and put our government on a path to fiscal sanity by cutting spending.”
“Unfortunately,” he said, “this opportunity has been wasted.”
A Democratic aide said the party’s top priorities when Congress returns from Thanksgiving break will be measures to extend unemployment insurance, expand a payroll tax holiday and protect physician payments under Medicare — all central elements of the Democrats’ supercommittee offer.
“We will get it done one way or the other,” the aide said.
The Murray/Hensarling announcement arrived after a tense day of last-ditch talks designed to solidify a deal in the face of growing expectations that the panel would fail. Seven members of the supercommittee — three Republicans and four Democrats — huddled for hours Monday in Sen. John Kerry’s Capitol Hill office, where the Massachusetts Democrat offered a new tax-reform proposal that was immediately dismissed by the Republicans as a “gimmick.”
A GOP aide said the Kerry proposal would raise taxes and that there was no indication any other supercommittee Democrat supported it.
Markets dropped out of the gate Monday as the panel’s failure became apparent. All three major stock indexes shed roughly 2 percent in the day’s trading, with the Dow Jones Industrial Average closing down nearly 250 points.
“Right now, the U.S. is [a] safe haven, despite what the supercommittee did, or didn’t do,” said Brian Gardner of Keefe, Bruyette and Woods.
Indeed, demand for U.S. Treasury bonds hit a 20-year high on Monday, and Alice Rivlin, President Clinton’s budget director, said Monday there would not likely be a bond market reaction from failure, though the stock markets might continue to fall.
Political experts worried openly that the panel’s failure is yet another sign that Congress is growing increasingly dysfunctional at the expense of the country’s economic and political standing.
Rivlin said Washington’s fundamental problem “is the polarization of the parties.”
“I am not an optimist today, ” Rivlin said. “I think this is a very serious defeat.”
Boehner said he’s “disappointed” at the panel’s failure, but vowed to “forge ahead” with the GOP’s efforts to slash spending.
“This process did not end in the desired outcome, but it did bring our enormous fiscal challenges into greater focus,” he said. “I am confident the work done by this committee will play a role in the solution we must eventually find as a nation.”
— This story was posted at 4:35 p.m. and last updated at 8:18 p.m.