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    November 21, 2011

US Debt Reduction Effort Nears Failure

   VOA News
   Members of the U.S. Joint Select Committee on Deficit Reduction attend
   a hearing on Capitol Hill (File)
   Photo: REUTERS
   Members of the U.S. Joint Select Committee on Deficit Reduction attend
   a hearing on Capitol Hill (File)

   The latest effort to cut the U.S. government's debt apparently has
   ended in failure.
   Leaders of a special debt reduction committee of the U.S. Congress plan
   to announce that they failed in their mandate from lawmakers to trim
   the federal debt by $1.2 trillion over the next decade. The 12-member
   "supercommittee" has a Monday night deadline to produce a deal, but
   Democratic and Republican lawmakers already are blaming each other for
   the collapse of the ef

                                 What Happens if the supercommittee fails?
   - $1.2 billion in cuts split equally between defense and non-defense
       spending are triggered.
       - Estimated at $55 billion in each type of spending per year from
       2013 through 2021.
       - Social Security, Medicare, and other programs exempt from cuts.
       - U.S. Defense Secretary Leon Panetta warns cuts could leave U.S.
       military with its smallest ground force since 1940s.
       -The automatic spending reductions are known as "sequestration."

   It is the third major attempt in the U.S. in the last year to cut the
   country's long-term debt. A plan from a bipartisan deficit commission
   also was shelved, and talks between President Barack Obama and House
   Speaker John Boehner for a large debt-cutting deal ended unsuccessfully
   several months ago.
   If no deal is reached this time, massive automatic cuts to defense and
   domestic programs will be triggered, beginning in January 2013.
   Some Republican lawmakers are calling for limiting the defense cuts.
   But with the U.S. heading into a presidential election campaign in
   2012, the debate over spending priorities - for defense as well as
   health care - is expected to be contentious. Many lawmakers also will
   be running for re-election next year.
   With the demise of the U.S. debt talks, and continuing worries about
   the European debt crisis, world stock markets fell Monday - with
   markets in London, Paris and Frankfurt down 2 percent or more. U.S.
   stocks also slid in early trading.
   A prominent U.S. economist, Mark Zandi of Moody's Analytics, suggests
   the financial markets will not react greatly if the committee fails
   because, he says, expectations have always been low. But he says a
   long-term failure by the United States to confront its debt problem
   will shatter investor confidence.
   The supercommittee's panel of 12 members, evenly divided between
   Republicans and Democrats, traded blame in interviews Sunday, saying
   they could not agree about whether and how to cut social programs and
   raise taxes.
   The committee was formed in August when the Senate and the House of
   Representatives were not able to resolve the same dispute in order to
   raise the U.S. debt ceiling. The U.S. government came within hours of
   being unable to pay its debts and the country's credit rating was
   downgraded for the first time in history.
   Mr. Obama has not been involved in the committee's efforts, but has
   called on the panel to make tough choices and "do its job."

   Some information for this report was provided by AP, AFP and Reuters.

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