While not officially declaring defeat, the deficit supercommittee remains in a partisan deadlock and had failed by Monday to reach a deal.
Although the supercommittee’s deadline is Wednesday, the committee was supposed to have its recommendations to the Congressional Budget Office today so that the CBO could “score” the recommendations.
Sen. John Kerry, D-Mass., a member of the deficit-reduction committee, said on the Fox News program “Fox and Friends” on Monday that a deal could still be reached by Wednesday if Republicans were willing to let the Bush-era tax rates expire. “The only thing blocking us is the insistence on the Bush tax cuts for the wealthy,” Kerry said.
White House Press Secretary Jay Carney said during a press briefing on Monday that “Congress still has the ability to act” if the deficit committee fails to reach a deal. “Congress needs to take action” if the deficit-reduction supercommittee cannot meet its goal, he said.
If a deal isn’t reached, automated cuts of $1.2 trillion mandated by law will not kick in until 2013, as previously reported by AdvisorOne.
U.S. stocks fell more than 3% on the major exchanges in afternoon trading on Monday on news of the deadlocked supercommittee. However, while worries have persisted that failure to reach an agreement could disappoint investors and lead to another downgrade of U.S. debt, David Kelly, chief market strategist for J.P. Morgan Funds, said that “with such low expectations of an agreement all along, it is hard to see why failure to reach one should move markets significantly.”
Meanwhile, he added, “the aftermath of S&P’s U.S. debt downgrade in August suggests that Treasury rates should not back up significantly just because of a further ratings cut.”