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World Watches U.S. Debt Super Committee Fall Flat, Awaits Reverberations

The so-called Super Committee was supposed to rescue the United States from sinking in a sea of debt. The Congressional group is now being written off as a flop – mainly because Republicans want to save the super-rich from having to pay more taxes.

Democratic Senator Max Baucus
Democratic Senator Max Baucus
Christian Wernicke

WASHINGTON, D.C. -- Not even an old hand like Max Baucus could pull the situation together. The Democratic senator from Montana has been in Washington for 33 years. Republicans respect the 69-year-old's gifts as a "dealmaker" – which is why his inclusion on the U.S. Congress's Super Committee, charged late this summer with coming up by mid-November with a long term plan to reduce the deficit, gave many a glimmer of hope that something useful could come of the endeavor.

It takes a lot to make an unflappable man like Baucus wax emotional, but at the end of last week he'd reached just that point. "We're at a time in American history where everybody's afraid -- afraid of losing their job," he said. The senator went on to say that there were not enough American legislators prepared to do what was right for the country because they were afraid of the radical elements in their parties. "Compared with the thousands who have given their lives in service to this country, I think it's tragic…" he said, in a reference to his nephew Philip, who died in Iraq in 2006.

Officially, the deadline for the 12-person committee is Monday night, but already on Sunday it became apparent that the six Democrats and six Republicans were unlikely to reach a compromise on how to tame federal debt. The failure will not do much to improve Congress's image with the American public. Only 9% of voters think it is doing a satisfactory job. But both parties are apparently hoping that the failure to reach agreement will help them in their campaigns in the lead-up to the presidential elections in November 2012. President Barack Obama has for weeks been referring to the "do-nothing" Congress letting the nation down in the middle of its economic crisis, while Republican candidates are spouting anti-Washington lines and promises to "clean up" Washington should one of theirs be elected to office.

The Super Committee was created in August, when President Obama and Republicans locked horns about raising the debt ceiling, and were only able to stave off U.S. default at the eleventh hour. Shortly afterwards, rating agency Standard and Poor's lowered the U.S. rating from Triple A to AA+. The Super Committee was supposed to break taboos: Democrats would accept some cuts to social security and medical insurance programs while Republicans would accept tax raises. Otherwise, as of January 2013 budget cuts would automatically come into play slicing both the budget for social programs and the defense budget by some $550--600 billion each – something that neither party wants to see.

As recently as 10 days ago, it looked as if some sort of agreement could be reached. The six Democrats agreed on $400 billion of cuts to various support and health insurance programs. For their part, Republicans would agree to tax raises of $300 billion over the next decade. That meant that a way had been found for two-thirds of the $1.2 trillion-compromise to be reached.

"Sticking divide"

But that was too optimistic. The Republicans wanted any tax increases to be contingent on continuation of the Bush cuts, which presently stand to expire at the end of 2012 and amount to $4 trillion over a 10-year period.

The Democrats agreed to let the Bush cuts stand – with one exception: the upper 2% of the income pyramid should pay higher taxes starting in 2013, a correction that would bring in $800 billion in additional revenue over a 10-year period. The Republicans balked. Senator Patty Murray, Democratic co-chair of the committee, described this as the "sticking divide."

"That is the issue of what I call shared sacrifice, where everybody contributes in a very challenging time for our country," said Murray. "That's the Bush tax cuts. In making sure that any kind of package includes everybody coming to the table; and the wealthiest of Americans, those who earn over $1 million every year, have to share, too. And that line in the sand, we haven't seen any Republicans willing to cross yet."

Meanwhile, Congressional insiders are whispering that legislators of both parties are seeking to put off major reforms until Nov. 7, 2012, the day after the presidential elections, when fear of the voters is at its lowest. Max Baucus will still be around to do his job – seeking and finding compromise. His term doesn't end until 2014.

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Photo - Center for American Progress

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