The Debt Reduction Super Committee appears to be on the brink of failure in Washington, causing many to point out that perhaps there is something ironic about the committee’s name. 

There have been prayer rallies held in Washington and elsewhere, in the hope that divine intervention would help the bipartisan committee agree on $1.2 trillion in deficit reduction made necessary by last summer’s debt ceiling bill. But it appears that God, or whomever, will not be intervening — most news outlets are reporting that the Super Committee has already failed to make its cuts and will not bring a plan to Congress.

What happened and what does that mean for us?

The Washington Post reports a bit on the partisan finger-pointing that has come out of the committee’s failure. Republican Senator Jon Kyl blamed Democrats for the committee’s failure because they were unwilling to make cuts to massive entitlement programs like Social Security and Medicare; Democrat John Kerry meanwhile blamed Republicans for the committee’s failure by demanding that Bush tax cuts not expire, and otherwise “refusing to consider significant tax increases on wealthier people.”

Paul Krugman, in his Friday column in the New York Times, predicted that mainstream media coverage of the committee’s failure would take this very approach: “he-said, she-said, quoting Democrats who blame Republicans and vice versa without ever explaining the truth.” The truth, Krugman explains, is that Republicans were unwilling to make concessions, while Democrats were — they spiked the committee from the start. And in their failure, we’ve managed to avoid seeing cuts to the small social safety net we have here in the States. That’s a good thing according to Krugman.

The joke is on them anyway, writes Daniel Gross on Yahoo! News. If Congress fails to get any meaningful taxation legislature through this year, the Bush tax cuts could expire, which would raise $3.3 trillion for the federal government. There are billions of dollars in savings to be had from Congressional inaction, Gross explains, and they’ve proven to be quite competent in that area.

Furthermore, the Los Angeles Times points out that the automatic cuts coming in 2013 will hit domestic spending as well as that Republican sacred cow: the Defense Department. And, already, Republicans are arguing that this particular “trigger” should be done away with, to spare the Pentagon.

But the true victim of this legislative failure will be our economy; markets are already trading down today on anxiety brought on by this news combined with fears from Europe; S&P could downgrade United States debt again if we don’t get our books in order.

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  • Anonymous

    $1.2 trillion, not billion. 

  • Richard Crawford

    The failure is actually a result of both parties over a long period of time and
    Washington politics as usual. It is also a failure of the media, during the
    debate this summer there was one person who came up with a creditable plan which
    took the deficit situation seriously, Sen Tom Coburn of OK. While everyone else
    was patting themselves on the back with their meaningless plans to cut spending
    1.2 to 4 trillion over ten years, he actually proposed 9 trillion in cuts over
    10 years and the media and others said it would be the end of the world. Only
    Coburn acted like he realized the true situation. we will have deficits of 1.1
    to 1.3 trillion per year over the next ten years which will add 11 to 13
    trillion to the 15 trillion National Debt that we already have. the super
    committee even if successful would not have even put a small dent into that
    figure. Also, my figure of 11 to 13 trilion does not account for the increased
    interest costs that we will pay or the additional spending for SS, Medicare, and
    Health care that will likely increase it even more. If we are serious about the
    situation we will look at deep speding cuts coupled with some changes to the tax
    code, we couls start with ending the mortgage interest deduction for 2nd homes,
    end the deductions that allow companies like GE to pay no income tax or have an
    AMT for Large Corporations, a change in the rules on carried interest so fund
    managers do pay income tax rates on their earnings, application fees for some
    government services and benefits to help defray some of the adminstrative costs
    involved, and even a VA Mortgage insurance fee for veterans- say maybe 10.00 per
    100,000 extra per month on their VA loans to help the VA cover its losses or
    possible losses. I would also say that we hae to do someting about the vacant
    non performing real estate that is currently in limbo in particular the low end
    of the market, we need to provide investors incentive to buy, fix up, and rent
    out these houses that people want to occupy but cannot buy due to bad credit or
    no credit. We also need to recycle what can’t be fixed and remove property that
    either cannot be occupied or are located where the demand has vanished  and has
    little chance of returning with some compensation in the form of tax credits or
    deductions provided to the owner. These ideas would help restore the housing
    market and by extension the property tax base of citie across the country.