Everyone May Feel Sting From Super Cmte. Failure
WASHINGTON (CBSMiami.com) – After the Congressional super committee finished off it’s expected failure to come to any agreement; the immediate question became what next?
The super committee of six Republicans and six Democrats failed to reach an agreement because of the continuing partisan battles in Washington.
Democrats put Social Security and Medicare reforms on the table, but Republicans flatly refused to consider any significant revenue increases.
For Floridians, cuts to Social Security and Medicare could cripple the Sunshine State’s economic recovery from the ongoing Great Recession.
Republicans insisted on making the Bush tax cuts permanent in exchange for adding $300 billion in tax increases.
The problem with that plan, as Democrats pointed out, was that by making the Bush tax cuts permanent, it would result in roughly $4 trillion in lost revenue over the next decade.
The failure of the super committee, while expected, will still come with a steep price that all Americans will have to pay.
When the deal crafting the super committee was signed into law, if the committee failed, there would be an automatic $1.2 trillion in spending cuts over 10 years targeting defense and domestic agency budgets. The triggered spending cuts will spare entitlement programs like Medicaid.
The Pentagon’s budget will see a reduction of roughly $1 trillion over the next decade. Republicans, and some Democrats, in Congress are now trying to avert those cuts.
But, reports from New York Tuesday said that ratings agencies will drop the U.S. credit rating if the cuts are changed.
Florida has multiple military bases, but, because the state’s economy is not chiefly tied to the military and military contractors, the impact of the Sunshine State will not be as severe as on states like Alabama, Virginia, and others.
While the military budget cuts will be steep, the cost to average Americans could be even steeper.
According to Bloomberg News, part of the deal that was proposed in the super committee would have extended unemployment benefits and secured a continued 2 percentage-point reduction in payroll tax for employees.
Senate finance chairman Max Baucus told Bloomberg that the payroll tax cut extension, and unemployment insurance extensions will “all get done.”
But, Baucus and Senate Democrats may have to pay dearly to get those policies past House Republicans.
The last time unemployment benefit extensions were set to lapse last year, Democrats had to agree to a two-year extension of the Bush tax cuts for all wealth levels in able to extend the unemployment benefits.
Medicare, which Republicans have targeted as being one of the biggest budget busters, will feel the pinch of the mandatory cuts as well.
According to Bloomberg News, a 27 percent cut in Medicare payments to doctors is scheduled to take place January 1, which could increase health care costs.
Congress will now have to try to push through pieces of legislation that will slowly try to tackle individual problems with the debt.
However, any movement to curtail the spending cuts could backfire on the bond market if the U.S. credit rating is downgraded.
It all sets the stage for a fierce 2012 election year where both sides will be fighting to claim the high road in the super committee’s failure.