US 'super-committee' fails to reach deficit deal

A US congressional committee tasked with reducing the deficit by $1.2tn (£762bn) has failed to come to an agreement.

The panel of six Republicans and six Democrats confirmed after the New York Stock Exchange had closed that its work had ended without a deal.

The outcome means automatic cuts outlined in the bill that created the committee should take effect from 2013.

The US national debt has just risen above $15tn.

The panel was set up in August, the result of a last-minute deal between the two sides in Congress to raise the debt ceiling and avert a default on US debt payments.

Finger-pointing

"After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee's deadline," Democratic Senator Patty Murray and Republican Representative Jeb Hensarling said in Monday's joint statement.

"We remain hopeful that Congress can build on this committee's work and can find a way to tackle this issue in a way that works for the American people and our economy," it added.

In a White House news conference later on Monday, President Barack Obama said it was Republicans' fault.

"There's still too many Republicans in Congress that have refused to listen to the voices of reason and compromise," he said.

President Obama said he would veto any attempt to reverse the automatic cuts to government spending.

They are to be applied over the next 10 years, split between defence and domestic budgets. A few programmes are to be protected, including Social Security and Medicaid.

Republicans said Democrats had never been serious about making cuts to entitlement programmes for the elderly and the poor.

Senator Pat Toomey said: "Unfortunately, our Democratic colleagues refused to agree to any meaningful deficit reduction without $1 trillion in job-crushing tax increases."

But Democrats said the Republicans were solely to blame for the failure - because they ruled out tax rises for the wealthiest Americans.

Senate Majority Leader Harry Reid said Republicans had "never found the courage to ignore the tea party extremists" and "never came close to meeting us half way".

US voters are already deeply disillusioned with Washington.

The BBC's Steve Kingstone in Washington says the political finger-pointing is likely to continue through to next November's congressional and presidential elections.

Congressional approval ratings in recent polls have been at historic lows.

As the reductions triggered by Monday's announcement are not set to take effect until January 2013, lawmakers have the time to change or repeal the automatic cuts.

Republican senators John McCain of Arizona and Lindsey Graham of South Carolina are already working on legislation that would undo the automatic defence reduction, replacing it with cuts across the federal government.

The panel's work was contentious from the beginning, with Senator Murray's request that the negotiations should not be leaked to the press largely ignored.

Democrats initially proposed a $3tn package, including $1.3tn of new revenue and $400bn in Medicare savings.

Republicans rejected the plan's tax rises.

US voters are already deeply disillusioned with Washington

Senator Pat Toomey, one of the Republican members of the panel, proposed a $1.2tn deal, with about $300bn in new revenue through tax changes, including lowering the top tax rate from 35% to 28%. However, his own party officials did not endorse the plan publicly.

Democrats objected to the proposed permanent lowering of tax rates paid by the top bracket.

Last week, Republican House Speaker John Boehner, who was not a member of the committee, proposed a new plan of nearly $650bn in savings, well below the $1.2tn goal.

The package included $543bn in spending cuts, $3bn of new revenue generated by closing a tax loophole for businesses to buy private jets, and $98bn saved from lower interest payments.

Democrats rejected the offer, saying it focused too heavily on spending cuts.