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Deficit Committee Folds With No Plan

Automatic cuts won’t affect Social Security and Medicare benefits

En español | A congressional panel, or "supercommittee," given special powers to reduce the nation's deficit conceded Monday that even those powers aren't enough to get past a fundamental political divide over whether to raise taxes and change spending programs like Social Security and Medicare.

See also: AARP responds as supercommittee fails to agree.

US Capitol with stormy sky - Super committee fails to reach a deal

Congress will likely wait until after the 2012 presidential election to settle deficit dispute. — Photo by Paul Conrath/Getty Images, Guy Crittenden/Getty Images

The Joint Select Committee on Deficit Reduction was charged with cutting at least $1.2 trillion from the deficit over the next 10 years. With no agreement on how to do that, some automatic actions will be triggered to reach the $1.2 trillion target: Defense spending will be pared almost $500 billion; an additional $500 billion would come from Medicare and other domestic spending programs; and interest payments on the national debt will go down.

Social Security and Medicaid are exempt from the automatic across-the-board reductions, called a "sequester." Medicare would face cuts of up to 2 percent, all from spending on health care providers, not benefits. AARP Legislative Policy Director David Certner says other programs for older people, such as Meals on Wheels, would be hurt.

President Obama on Monday night blamed Republicans for refusing to "listen to the voices of reasons and compromise." He threatened to veto any effort to stave off the automatic budget cuts. "My message to them is simple: No," Obama said. "There will be no easy off-ramps on this."

Public's perception of Congress damaged

Pete Sepp, vice president of the National Taxpayers Union, says the cuts are hardly "doomsday" because they slow down growth instead of cutting from current spending levels. And the Medicare changes are small compared with the size of the program. "This is not a gigantic wound to the Medicare program," Sepp says.

Michael Tanner, senior fellow at the Cato Institute, agrees. "Spending 10 years from now will be higher than it is this year, despite cutting $1.2 trillion," he says. "The amount of debt we are facing is a severe drag on the economy."

And the supercommittee's failure to break Washington's logjam could add more drag on the economy. Frank Newport, editor-in-chief of the Gallup Poll, says the August debt ceiling showdown hurt consumer confidence. If that happens again now, holiday shopping sales could be suppressed, he says.

The deficit battles also have hurt public perceptions of Congress. The current congressional approval rating of 13 percent ties the record low. Recent polls, he says, show the public would like Congress to compromise and reduce the deficit by raising taxes and cutting spending. It's unclear, Newport says, whether the latest failure can drive approval ratings lower when they are already so low. "It's a pretty devastating report card on Congress."

Next: Medicare doctor payments unresolved. >>

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