The 12-member congressional supercommittee tasked with finding at least $1.2 trillion in budget savings over the next decade is set to declare defeat today, with Republicans and Democrats issuing a joint statement as three months of talks end in a stalemate.
The two sides have proven themselves too deeply entrenched to compromise on tax increases and benefit cuts, both of which budget experts say are needed to set the country’s finances on a stable path. Lawmakers are unlikely to return to the problem until 2013 at the earliest as they shift their attention to the 2012 elections.
However, Democrats will likely continue their push to extend short-term economic stimulus measures — such as enhanced unemployment benefits and a payroll tax cut — over the coming months. Economists say the economy could backslide into recession if they are allowed to expire at the end of the year, as planned.
Meanwhile, Republicans will try to shield the Pentagon from the $600 billion in automatic spending cuts that will be triggered in 2013 in the absence of a deal.
The threat of automatic spending cuts, which would deal an equally heavy blow to both Democrats and Republicans alike, was supposed to ensure that a deal would be reached. Entering discussions, the supercommittee already had a clear blueprint for an agreement that included removing loopholes from the tax code and reining in ballooning health benefits.
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However, in the end, Republicans were unwilling to sign off on tax increases while Democrats were unwilling to give in to a dramatic benefits overhaul.