A special debt-reduction committee in the U.S. Congress failed to reach agreement, extending partisan gridlock into the 2012 election year and setting the stage for $1.2 trillion in automatic spending cuts.
President Barack Obama blamed Republicans, saying in remarks at the White House they “refused to listen to the voices of reason and compromise.” The president said he would veto any move to avoid the automatic spending cuts that are supposed to start in 2013 as a result of panel’s failure.
Committee co-chairmen Representative Jeb Hensarling of Texas, a Republican, and Senator Patty Murray of Washington, a Democrat, said in an e-mailed statement that “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.”
Murray told reporters she would keep working toward a “fair and balanced” deal that could forestall the automatic cuts. “We have a responsibility to find that solution, and I’m going to keep working each and every day until we get there.”
Standard & Poor’s said it would keep the U.S. government’s credit rating at AA+ after the Hensarling and Murray announcement. S&P, which stripped the U.S. of its top AAA grade on Aug. 5, said it decided that the failure by the committee didn’t merit another downgrade. Moody’s Investors Service today affirmed its Aaa credit rating of the U.S. while maintaining a negative outlook.
The official announcement by the so-called supercommittee came after members spent the day shuttling between meetings at the Capitol to try to reach a last-ditch accord on at least $1.2 trillion in cuts over a decade. The panel was established as a way to end an impasse in Washington after other efforts over the past year aimed at reducing the deficit collapsed amid partisan wrangling.
Both parties expressed disappointment and blamed each other for the impasse. Democrats said Republicans wouldn’t budge on their opposition to tax increase and Republicans accused Democrats of refusing to consider changes to entitlement programs such as Medicare.
Treasuries rallied while riskier assets declined as the supercommittee’s deadlock spurred demand for safer assets.
The Standard & Poor’s 500 Index lost 1.9 percent to close at a six-week low of 1,192.98 at 4 p.m. in New York. The MSCI All-Country World Index sank 2.3 percent in its first six-day slump since August. Yields on 10-year Treasury notes fell four basis points to 1.97 percent.
Sightline Payments Kirk Sanford
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