Deficit gridlock looms, supercommittee deadlocked

November 18, 2011 - 6:20 PM
Debt Supercommittee

Rep. Jeb Hensarling, R-Texas, co-chair of the supercommittee, tells reporters outside his office that the deficit reduction panel would work over the weekend as the deadline for its work nears, on Capitol Hill in Washington, Friday, Nov. 18, 2011. (AP Photo/J. Scott Applewhite)

WASHINGTON (AP) — Deadline nearing, the deficit-reduction talks in Congress sank toward gridlock Friday after supercommittee Democrats rejected a late Republican offer that included next-to-nothing in new tax revenue. Each side maneuvered to blame the other for a looming stalemate.

The panel faces a deadline of next Wednesday, the day before Thanksgiving, and lawmakers on both sides stressed they were ready to meet through the weekend in a last-ditch search for compromise.

But there was little indication a breakthrough was likely in a day of closed-door meetings.

Elsewhere at the Capitol on Friday, the House rejected a Republican proposal to amend the Constitution to require a balanced budget, a proposal that would have conceded Congress was unable to fight mounting federal red ink unless its hand was forced.

In the midst of the urgent effort to accomplish that deficit-cutting goal, Republicans disclosed they had outlined an offer on Thursday for about $543 billion in spending cuts — leaving Medicare, Medicaid and Social Security untouched — and $3 billion in higher tax revenue.

Democrats have long demanded that Republicans agree to significant amounts of higher taxes on the wealthy as part of any deal, and they quickly rejected the offer, according to officials in both parties.

"Where the divide is right now is over taxes, and whether the wealthiest Americans should share in the sacrifices," said Washington Sen. Patty Murray, the Democratic co-chair of the panel.

One Republican leadership aide familiar with the offer said it included only provisions that had drawn bipartisan support in talks throughout the year. This aide also noted it included President Barack Obama's proposal to reduce the tax break currently used by purchasers of corporate jets.

It was unclear where the talks would turn next, but the GOP proposal suggested the discussions had effectively moved into a range of savings far below the $1.2 trillion the committee has been seeking.

It also appeared Republicans were jettisoning a plan for $300 billion in higher tax revenue, an offer that had exposed internal GOP divisions when it was presented two weeks ago. It also has failed to generate momentum for a compromise among Democrats.

If the panel fails to reach agreement, $1.2 trillion in automatic spending cuts are to take effect beginning in 2013, a prospect that lawmakers in both parties say they want to avoid.

That is particularly true among defense hawks, who argue that the Pentagon cannot sustain the estimated $450 billion in cuts that would be required.

In a letter to Murray and Rep. Jeb Hensarling, R-Texas, the GOP chairman of the supercommittee, the head of the House Armed Services Committee warned of "immediate, dire and in some cases irrevocable" damage to the nation's military. "Our ability to respond to national security crises or humanitarian disasters would be disrupted," added Rep. Howard P. (Buck) McKeon, R-Calif.

Republicans familiar with the GOP plan said it included $543 billion in spending cuts, fees and other non-tax revenue, as well as the $3 billion corporate jet provision. There also would be $98 billion in reduced interest costs.

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Associated Press writer Donna Cassata contributed to this report.