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U.S. Supercommittee Ready to Announce Failure

By Kathleen Hunter and Laura Litvan -

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The sun rises over the Capitol in Washington. Photographer: Andrew Harrer/Bloomberg

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The Capitol stands in Washington. Photographer: Andrew Harrer/Bloomberg

The deficit-cutting congressional supercommittee is expected to announce tomorrow that it has failed to reach agreement on at least $1.2 trillion in federal budget savings, a Democratic aide said.

The aide, who wasn’t authorized to discuss internal matters publicly and requested anonymity, said in an e-mail this afternoon that it was highly unlikely that the talks could be salvaged. Tomorrow is the deadline for the Congressional Budget Office to receive a plan that it can analyze before the committee’s Nov. 23 target date for reaching an agreement.

Earlier today the supercommittee’s Republican co-chairman, U.S. Representative Jeb Hensarling of Texas, said the 12 panel members faced a “daunting challenge” as they sought to bridge gulfs over taxes and spending.

The panel has been deadlocked over taxes, with Democrats seeking tax increases on high earners while Republicans were pushing for an extension of tax cuts enacted under President George W. Bush. Another sticking point has been the Republicans’ call for cuts, over Democrats’ opposition, in entitlement programs such as Medicare.

“Nobody wants to give up hope,” Hensarling said on the “Fox News Sunday” program. “Reality is, to some extent, starting to overtake hope.”

Asian stocks fell, Standard & Poor’s 500 Index futures declined and Treasuries advanced in anticipation of a Congressional impasse.

‘Silver Lining’

Senator Pat Toomey, a Pennsylvania Republican and supercommittee member, said on CBS’s “Face the Nation” that the “silver lining” in a failure to agree would be $1.2 trillion in automatic across-the-board budget cuts starting in 2013. That process, known as sequestration, is designed to spare the U.S. from another credit downgrade.

Senator John Kerry, a Massachusetts Democrat and supercommittee member, warned of potential risk of a downgrade of the U.S. credit rating if the group can’t come together and if lawmakers skirt the mandatory cuts.

“There is a real threat that not only will there be a downgrade but that the market on Monday will look again at Washington and say ‘You guys can’t get the job done,’” Kerry said on NBC’s “Meet the Press” program. “And just the political confusion and gridlock is enough to say to the world ‘America can’t get its act together.’”

Asian Stocks Fall

About three shares declined for every two that gained on MSCI’s Asia Pacific Index in early Nov. 21 trading, while Treasury 10-year yields decreased three basis points to 1.98 percent. The dollar traded at 76.79 yen at 11:50 a.m. in Tokyo from 76.91 in New York on Nov. 18.

Investors have largely shrugged off Standard & Poor’s Aug. 5 downgrade of U.S. debt from AAA to AA+. After the downgrade, the government’s borrowing costs fell to record lows as Treasuries rallied. 10-year yields fell from 2.56 percent on Aug. 5 to below 1.72 percent on Sept. 22.

“I don’t think there’d be much of a reaction” by markets to a supercommittee failure to agree on a plan, Mark Zandi, the chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, said on “Fox News Sunday.”

“It’s all relative to expectations,” he said, and investor expectations with regard to the committee “have been and are still very, very low.”

Senator Jon Kyl of Arizona, the No. 2 Senate Republican leader and a supercommittee member, said on “Meet the Press” that Republicans would look for a way “to work around” some of those automatic spending cuts, including easing the mandated $500 billion in cuts to Pentagon spending over the next decade.

“There is a way to avoid that if there’s good will on both sides,” he said of defense cuts he described as “Draconian.”

‘More Prudent’ Reductions

Hensarling said he hoped the across-the-board cuts required if no deal is reached would be altered to spare defense. Congress, he said, will have 13 months to make sure the reductions happen “in a smarter, more prudent fashion.”

If the supercommittee fails, he said, “the American people are still going to get the deficit reduction that was contemplated under the law, but it is a huge blown opportunity.”

Both Kerry and Senator Patty Murray of Washington, the supercommittee’s Democratic co-chairman, insisted today that Democrats have been willing to make some cuts to entitlement programs, which include Social Security, Medicare and Medicaid. What was needed, Kerry said on NBC, was for Republicans to drop a push for another extension of the Bush-era tax cuts that now expire at the end of 2012.

‘Shared Sacrifice’

“There is one sticking divide, and that is the issue of what I call shared sacrifice, where everybody contributes in a very challenging time for our country, and that’s the Bush tax cuts and making sure that any kind of package includes everybody coming to the table, and the wealthiest of Americans, those who earn over $1 million every year, have to share, too,” Murray said on CNN’s “State of the Union” program. “That line in the sand, we’ve haven’t seen any Republicans willing to cross yet.”

Kyl said Republicans had offered to increase revenue by $300 billion as part of a broad tax overhaul. He said the compromise was “a big step for Republicans,” who oppose tax increases. He also restated the case against raising taxes in a struggling economy.

“You can’t grow if you raise taxes in the middle of a recession,” Kyl said.

Hensarling said that even if no agreement is reached, “the nation is still going to end up with what Republicans said, and that is there will still be a dollar of spending reduction for every dollar increase in the debt ceiling.”

To contact the reporters on this story: Laura Litvan in Washington at llitvan@bloomberg.net Kathleen Hunter in Washington at khunter9@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

Good Post Bad Post

21-Nov-2011 11:56

Straits Times Index / STI to cross 3000 boosted by long-term investors

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x 0

If end this year will hit STI 2400.. I will Smiley

you
You also said next year will be lower than 2400? Smiley

Anybody can say " STI RED RED, DOW 9K, Euro deep red... "

But no one can be absolutely more " accurate" than you... Smiley

Isolator ( Date: 20-Nov-2011 23:20) Posted:

hmmm.... STI will be 2400..... nothing change.... Next year it will be even lower..... " Paper can't wrap fire" ... Be prepare that the Government will be touching the golden goose again....

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21-Nov-2011 10:44

TA / TA Corp listing, stake holders come in...

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x 0

People should really SEE with BIG EYES for themselves instead of being lured into news or hearsays..
No one can tell you what is " safe" or " not safe"
Even Condom packets will tell ya its 99% safe and not 100%.. LOL

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21-Nov-2011 10:41

Yanlord Land / Lord of China Prop

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x 0

Find it funny that people didn't accumulate when it was 7x to 9x cents..
Now when people accumulate and want to let go and ask " WHY GO DOWN??" should be.. Smiley

Those who shorted last week at high will be Smiley

One must remember to be like this Smiley

in this volatile times

Huat AH!

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18-Nov-2011 15:05

Straits Times Index / STI to cross 3000 boosted by long-term investors

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x 0

In today's markets, one cannot have too much feelings..
Cut Loss and Hit profits target once its realised, its over for the moment..
There will be other good opportunities to come by..
Sadly the newbies will have to learn the hard way (," )

iPunter ( Date: 18-Nov-2011 14:56) Posted:

What about all those whom you have asked to " buy on dips" ?

They are very poor things now...

Hope they know what to do... but I doubt... Smiley

risktaker ( Date: 18-Nov-2011 14:50) Posted:

Omg lost so much today...... I close my position liao..... I gonna take a break.... lost too much today..... Cheers

Good Luck ... Ang Mos keep selling like crazy....

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18-Nov-2011 15:02

Yanlord Land / Lord of China Prop

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x 0

Yes. usually People will very " gian gian" to buy in when they hear BIG Names .. LOL
Thats a classic trap.

iPunter ( Date: 18-Nov-2011 13:37) Posted:

Buying or selling must be made before it moves... Smiley

medivh ( Date: 18-Nov-2011 13:18) Posted:

Never chase stocks... as I mentioned before.. this one can be gathered at lower levels..
Why be greedy now

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18-Nov-2011 13:18

Yanlord Land / Lord of China Prop

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x 0

Never chase stocks... as I mentioned before.. this one can be gathered at lower levels..
Why be greedy now?

medivh ( Date: 14-Nov-2011 20:26) Posted:

This is just my 2c view,
I saw some BBs distributing today..
And saw some traders being lured to buy at high px..
Just becareful..

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16-Nov-2011 11:49

IPO / any views on Libra

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x 0

Still got chance if you haven't get in... this IPO price at 20.5c.. still long way to fall.. LOL (" ,)

freeme ( Date: 16-Nov-2011 10:45) Posted:

good la.. knn i miss it.. bec see yanlord up so much damn

medivh ( Date: 16-Nov-2011 10:18) Posted:

Woo hooo.. anyone short this in the morning?
I played around with 30lots at 56c... now see px 46c (" ,)
Too good to be true..

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16-Nov-2011 10:18

IPO / any views on Libra

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x 0

Woo hooo.. anyone short this in the morning?
I played around with 30lots at 56c... now see px 46c (" ,)
Too good to be true..

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16-Nov-2011 10:15

Yanlord Land / Lord of China Prop

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x 0

This cow I have " milked" several times over and over again.
Just advice those new here not to chase stocks anyhow..
Anyway my congrats to those who have huat with me in this stock for many times over..
Today hit $1.20 liao.. you all know what it means.

alexchia01 ( Date: 15-Nov-2011 23:20) Posted:

Price where got high.

This counter has been climbing up too slow.

There's a lot of Buy Up, but are done slowly.

It's when the price suddenly shoot up very high, then need to becareful.

medivh ( Date: 14-Nov-2011 20:26) Posted:

This is just my 2c view,
I saw some BBs distributing today..
And saw some traders being lured to buy at high px..
Just becareful..

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15-Nov-2011 20:17

IPO / any views on Libra

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x 0

Today those who shorted in the morning Smiley

Saw alot of short covering near afternoon.
Those who play intraday long will be like this.. Smiley

Very happy and smiling all the way to bank.

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14-Nov-2011 20:35

Straits Times Index / STI to cross 3000 boosted by long-term investors

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x 0

Where got " malu" if run on track mill in HDB flat,
Only if got curry smell then will attract attention,
you don't peak into HDB window can already LOL (" ,)

iPunter ( Date: 12-Nov-2011 15:48) Posted:

Better go to Europe or Mediteranean beach to run...

or sunbathe... Here is still malu... lol... Smiley

medivh ( Date: 12-Nov-2011 15:42) Posted:

Already joined WB, RUN around NAKED! LO

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14-Nov-2011 20:29

Straits Times Index / STI to cross 3000 boosted by long-term investors

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x 0

IMO: this week , if can " zhao" with profits, better do.. and just sit back and watch show..
The whipsaw action will still continue... not for the faint hearted (" ,)

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14-Nov-2011 20:26

Yanlord Land / Lord of China Prop

Go to Message

x 0

This is just my 2c view,
I saw some BBs distributing today..
And saw some traders being lured to buy at high px..
Just becareful..

Good Post Bad Post

14-Nov-2011 16:59

Yanlord Land / Lord of China Prop

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x 0

Good to have taken profits and stay sideline first...wait for better opportunities.

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14-Nov-2011 15:57

Yanlord Land / Lord of China Prop

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x 0

Those who vested , congrats !..

remember to take profits..

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13-Nov-2011 21:25

Yanlord Land / Lord of China Prop

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x 0

As I mentioned before, this one got BB support (" ,)

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12-Nov-2011 15:42

Straits Times Index / STI to cross 3000 boosted by long-term investors

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x 0

Already joined WB, RUN around NAKED! LOL

iPunter ( Date: 12-Nov-2011 15:33) Posted:

Then you should have bet your shirt? Smiley

medivh ( Date: 12-Nov-2011 15:32) Posted:

BINGO!

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