Supercommittee fails to reach agreement
WASHINGTON (AP) - Don't look for the Pentagon to shut down one side of its famous five-sided building. Don't expect the Education Department to pull back its grants just yet.
With the collapse of the deficit-cutting supercommittee, Congress' emergency backup budget-cutting plan now is supposed to take over - automatic, across-the-board spending reductions of roughly $1 trillion from military as well as domestic government programs.
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 led the charge Monday, 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.
Obama declared he would veto any effort to undo the automatic cuts. But there are sure to be efforts in that direction.
"Our military has already contributed nearly half a trillion to deficit reduction. Those who have given us so much have nothing more to give," said House Armed Services Committee Chairman Howard "Buck" McKeon, R-Calif., in promising to introduce legislation to prevent the cuts.
Sens. John McCain of Arizona, the top Republican on the Senate Armed Services Committee, and Lindsey Graham, R-S.C., a member of the panel, said they would "pursue all options" to avoid deeper defense cuts.
The congressional rank and file may be determined to spare defense and undo the automatic cuts, but there's hardly unanimity. Deficit-cutting tea partyers within the GOP side with liberal Democrats in signaling they're ready to allow military reductions. In addition, House Speaker John Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev., said they would abide by the consequences of the deficit-fighting law - and they control what legislation moves forward.
Freshman Sen. Rand Paul, R-Ky., a tea party favorite, even questioned the legitimacy of the outcry over the military reductions, from Defense Secretary Leon Panetta contending the cuts would be devastating to McKeon's warning that they would "cripple our ability to properly train and equip our force, significantly degrading military readiness."
"I think we need to be honest about it," Paul said in an interview on CNN Sunday. "The interesting thing is there will be no cuts in military spending. This may surprise some people, but there will be no cuts in military spending because we're only cutting proposed increases. If we do nothing, military spending goes up 23 percent over 10 years. If we sequester the money, it will still go up 16 percent. So spending is still rising under any of these plans."
According to the nonpartisan Congressional Budget Office, the planned Pentagon budget for 2021 would be some $700 billion, an increase over the current level of about $520 billion. The cuts already in the works plus the automatic reductions would trim the projected amount by about $110 billion.
"It's not a decrease in the military budget. It's reducing the increase," said John Isaacs, executive director of Council for a Livable World and Center for Arms Control and Non-Proliferation.
But McCain and Graham have been working on legislation that would undo the automatic defense reductions and instead impose a 5 percent across-the-board reduction in government spending combined with a 10 percent cut in pay for members of Congress.
The Senate resumes work next week on a massive defense bill, a possible candidate for any effort to rework or undo the cuts.
"It's a near certainty they will try to get out from under it," Robert Bixby, executive director of the Concord Coalition, a nonpartisan group advocating fiscal discipline, said of the automatic cuts. "It's equally certain they will damage their credibility if they do so."
Congress' supercommittee conceded ignominious defeat Monday in its quest to conquer a government debt that stands at a staggering $15 trillion, unable to overcome deep and enduring political divisions over taxes and spending.
"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," the panel's two co-chairs, Sen. Patty Murray, D-Wash., and Rep. Jeb Hensarling, R-Tex., said in a somber statement.
They added it was not possible to present "any bipartisan agreement" - omitting any reference to the goal of $1.2 trillion in cuts over a decade that had been viewed as a minimum for success.
On the next page: What led to the breakdown?
Some Republicans said Obama shared the blame for any failure. "It's amazing to what lengths he will go to avoid making tough decisions," said Texas Gov. Rick Perry, a GOP White House hopeful.
Based on accounts provided by officials familiar with the talks, it appeared that weeks of private negotiations did nothing to alter a fundamental divide between the two political parties.
Before and during the talks, Democrats said they would agree to significant savings from benefit programs like Medicare, Medicaid and Social Security only if Republicans would agree to a hefty dose of higher taxes, including cancellation of Bush-era cuts at upper-income brackets.
In contrast, The GOP side said spending, not revenue, was the cause of the government's chronic budget deficits, and insisted that the tax cuts approved in the previous decade all be made permanent.
The Democrats' "idea was this was the opportunity to raise taxes,"' said Sen. Jon Kyl of Arizona, the Senate's second-ranking Republican and a member of the supercommittee. "It didn't matter what we proposed; the price of that was going to be $1.3 trillion in new taxes," he added in a CNBC interview, although Democrats made at least two offers that called for smaller amounts of additional tax revenue.
Sen. John Kerry, D-Mass., said on MSNBC, "I have demonstrations outside my office. I've had rallies. I've had unbelievable amount of pushback because we were ready and prepared to put on the table some of those so-called sacred cows." Republicans, he said, refused to consider cancellation of the tax cuts for the wealthy.
The talks also were hampered by internal divisions within both parties.
Republicans offered a plan crafted by Sen. Pat Toomey of Pennsylvania about two weeks ago that included an additional $250 billion in tax revenue through an overhaul of the tax code that included reducing the top tax rate from 35 percent to 28 percent.
Some Republicans criticized it as a violation of the party's long-standing pledge not to raise taxes. Even some in the GOP leadership, including Senate Republican Leader Mitch McConnell of Kentucky and House Majority Leader Eric Cantor of Virginia, declined to endorse it in public.
At the same time, Democrats ridiculed it as a tax cut for the rich in disguise - even privately criticizing Sen. Dick Durbin, D-Ill., when he said it could signal a breakthrough - and it failed to generate any momentum toward compromise. Senate Majority Leader Harry Reid, D-Nev., and others also accused Republicans of bowing to the wishes of Grover Norquist, an anti-tax activist whose organization has gathered signatures from GOP candidates on a petition pledging never to raise taxes.
And Democrats had problems of their own. An offer presented by Sen. Max Baucus, D-Mont., to cut about $3 trillion from future deficits failed to win the backing of two of the six committee members of his own party.
Officials said they objected because it would have curtailed future cost-of-living increases for Social Security recipients. Some Senate liberals spoke out against the provision in speeches, Baucus jettisoned it from a subsequent offer and Republicans cited that as an example of Democratic intransigence.
The panel's failure marked the end of an extraordinary yearlong effort by divided government to grapple with budget deficits that lawmakers of both parties and economists of all persuasions agreed were unsustainable.
Negotiations in the Capitol led by Vice President Joseph Biden were followed by an extraordinary round of White House talks in which Obama and House Speaker John Boehner sought a sweeping compromise to cut trillions from future deficits. They outlined a potential accord that would make far-reaching changes in Medicare and other programs, while generating up to $800 billion in higher revenue through an overhaul of the tax code. But in the end, they failed to agree.
By contrast, the supercommittee never came close, instead swapping increasingly small-bore offers that the other side swiftly rejected.