United States Other

United States

Super committee fails to agree on deficit reduction measures

The Joint Select Committee on Deficit Reduction, commonly referred to as the ?super committee?, announced on 21 November that it would not be able to reach an agreement. If Congress fails to work out an agreement, the automatic spending cuts of USD 1.2 trillion over a ten-year period that were established by the Budget Control Act of 2011, would come into effect in 2013. Accordingly, spending would be cut across the board, divided in two equal parts between security and non-security programmes. Each part is worth approximately USD 500 billion, with roughly USD 200 billion assumed to come from interest not paid as a result of the associated savings. Congress could still reach an agreement before automatic spending cuts kick in. However, the latter is unlikely, as next year is an electoral year and thus the debate is likely to be postponed until 2013. With the collapse of the super committee, attention has shifted to the extension of the 2% payroll tax cut and emergency unemployment insurance, both of which are set to end this year. President Obama has urged Congress to vote in favour of the payroll tax extension, while the Democrats have already introduced a bill to the House of Representatives that would extend federal unemployment insurance throughout 2012.


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