WASHINGTON (Reuters) – US lawmakers abandoned their high-profile effort to rein in the country’s ballooning debt yesterday in a sign that Washington likely will not be able to resolve a dispute over taxes and spending until 2013.
The admission of defeat by Republicans and Democrats on a 12-member congressional “super committee” is likely to cement perceptions among voters and investors that politicians are too divided to tackle trillion-dollar budget deficits and a national debt that now is roughly equal to the US economy.
“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,” Republican Representative Jeb Hensarling and Democratic Senator Patty Murray said in a joint statement.
But lawmakers will be less willing to compromise as they shift their attention to the November 2012 presidential and congressional elections.
The finger-pointing began within minutes of the announcement.
President Barack Obama said at the White House that Republicans had scuttled the talks by refusing to consider tax hikes on the wealthy.
“They simply will not budge from that negotiating position and so far that refusal has been the main stumbling block that has prevented Congress from reaching an agreement to further reduce the deficit,” Obama said at the White House.
Republicans blamed Obama for a lack of leadership and said his Democrats had been unwilling to consider a fundamental overhaul of government-run healthcare programmes that could swamp the economy in coming decades as the population ages.
The panel waited until after US markets closed at 4 pm (2100 GMT) to formally declare the effort dead, but shares on Wall Street had already hit a one-month low due to fears of out-of-control government debt in Europe and the United States. Japan’s Nikkei index opened lower today, hitting its lowest level in eight months.
The committee’s failure to agree on $1.2 trillion in deficit reduction sets up a year of uncertainty on taxes and spending that could further rattle investors already shaken over euro zone debt woes.
