WASHINGTON — 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.
Stock prices plummeted at home and across debt-scarred Europe as the panel ended its brief, secretive existence without an agreement. Republicans and Democrats alike pointed fingers of blame, maneuvering for political advantage in advance of 2012 elections less than a year away.
The impasse underscored grave doubts about Washington’s political will to make tough decisions and left a cloud of uncertainty over the U.S. economy at the same time that Greece, Italy, Spain and other European countries are reeling from a spreading debt crisis and recession worries.
Lawmakers of both parties agreed action in Congress was still required, somehow, and soon.
“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.
President Barack Obama — criticized by Republicans for keeping the committee at arm’s length — said refusal by the GOP to raise taxes on the wealthy was the main stumbling block to a deal. He pledged to veto any attempt by lawmakers to repeal a requirement for $1 trillion in automatic spending cuts that are to be triggered by the supercommittee’s failure to reach a compromise, unless Congress approves an alternative approach.
Those cuts are designed to fall evenly on the military and domestic government programs beginning in 2013, and Defense Secretary Leon Panetta as well as lawmakers in both parties have warned the impact on the Pentagon could be devastating.
“In my four decades involved with public service, I have never been more concerned about the ability of Congress to forge common-sense solutions to the nation’s pressing problems,” Panetta, a former House budget committee chairman, said in a statement. “The half-trillion dollars in additional cuts demanded by sequester would lead to a hollow force incapable of sustaining the missions it is assigned.”
In reality, though, it is unclear if any of those reductions will ever take effect, since next year’s presidential and congressional elections have the potential to alter the political landscape before then.
The brief written statement from Murray and Hensarling was immediately followed by a hail of recriminations.
Senate Majority Leader Harry Reid, D-Nev., said Republicans had “never found the courage to ignore the tea party extremists” and “never came close to meeting us half way.”
But Sen. Pat Toomey, R-Pa., who authored a GOP offer during the talks, said, “Unfortunately, our Democratic colleagues refused to agree to any meaningful deficit reduction without $1 trillion in job-crushing tax increases.”
It was unlikely the outcome would materially improve Congress’ public standing — already well below 20-percent approval in numerous polls.
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.
Within the past week, Democrats said they would accept a Republican framework for $400 billion in higher tax revenue and $800 billion or so in spending cuts, while rejecting numerous key proposals.
Late last week, Boehner floated an offer that included $543 billion in spending cuts, fees and other non-tax revenue, as well as $3 billion in tax revenue from closing a special tax break for corporate purchases of private jets. It also assumed $98 billion in reduced interest costs.
It was swiftly rejected.