"Super Committee" Fails To Reach Deal
Surprise! The "super committee" has failed to reach a deficit reduction deal, which means that an automatic $1.2 trillion in spending cuts will be triggered over the next 10 years.
The "super committee" (formally known as the Congressional Joint Select Committee on Deficit Reduction) was created by the Budget Control Act of 2011, which came as a result of the "debt ceiling" confrontation that took place earlier this year.
The "super committee", which consisted of 6 Republicans and 6 Democrats, was charged with the task of cutting $1.2 trillion from the nation's projected accumulated deficit over the next 10 years. Both sides insisted that "nothing was off the table", and that both spending cuts and revenue increases would be considered.
In the end, the two sides were not able to reach a deal, and the finger pointing has already started.
Democrats claim that the Republicans weren't willing to make a "shared sacrifice" in the form of substantial revenue increases (tax increases), while the Republicans claim that the Democrats wanted to enact economically damaging tax increases that would hurt the creation of new jobs in the country.
This theme is going to continue right through to the 2012 Presidential election, with Democrats arguing that tax increases are needed in order to cut the deficit, and Republicans contending that tax increases would crush an already fragile economy.
In the end, the failure of the "super committee" can not come as a surprise to anyone, as the Democrats and Republicans are seemingly more divided than ever. The two sides can't agree what color the sky is, let alone figure out a deficit reduction deal.
The immediate fallout of the failed deal? Market weakness and the possibility of another debt downgrade. Another piece of news that will make the uneasy global economy even more unstable.
Filed under: The Economic Meltdown