The Deficit Reduction Commission Agreement Fails, U.S. Debt Ratings May Be Downgraded Again

The Deficit Reduction Commission Agreement Fails, U.S. Debt Ratings May Be Downgraded Again (Alberta Times) The Congressional Deficit Reduction Committee seems to have failed to complete its mission of reducing the deficit by at least 1.2 trillion yuan,...

(Alberta Times)

The Congressional Deficit Reduction Committee seems to have failed to complete the mission of reducing the deficit by at least 1.2 trillion yuan. The two parties accused each other on the 20th and prepared to announce on the 21st that they could not reach an agreement before the deadline of the 23rd due to serious differences on tax increases and welfare cuts. The failure of the Deficit Reduction Committee to accomplish anything may intensify the turmoil in the stock market and may also put U.S. Treasury bonds at risk of another downgrade. Failure of the deficit reduction committee could result in automatic cuts to defense and many government departments' 2013 budgets to reduce spending by $1.2 trillion. It may also lead to a further decline in the approval rating of Congress, which is only 9%, hurting members facing re-election next year, and seriously affecting the re-election of President Obama, whose economic stimulus plan has led to a large increase in the federal budget deficit. The deadline for the Deficit Reduction Committee to propose a deficit reduction plan is the 23rd, but the committee should submit a plan on the 21st to allow the Congressional Budget Office time to evaluate the deficit reduction plan. The divisions within the deficit reduction committee are serious. Most Republicans do not agree with the tax increases demanded by Democrats, while Democrats do not accept Republicans' drastic cuts to welfare programs such as Social Security, Medicare for the elderly, and Medicaid for the poor. With elections looming next year, it will be difficult for lawmakers from both parties to make concessions. During the national debt crisis this summer, S&P, one of the three major international rating agencies, downgraded the rating of U.S. Treasury bonds from triple-A to AA+. However, the reduction did not put pressure on the deficit reduction committee. On the 20th, major members of the two parties criticized each other on Sunday talk shows. Republican Senator Kyle said on NBC's "Meet the Press": "Look at the Democratic position, which is, 'We must raise taxes.' The jobs bill that Congress must pass will almost increase the budget by another 500 billion yuan. We have no interest in reforming the welfare system." Democrats believe that the lack of a deficit reduction agreement is because Republicans refuse to consider raising taxes. Democratic Senator Patty. Murray said on the CNN TV program: "There are serious differences between the two parties. I think both sides must make sacrifices, and wealthy people with annual incomes of more than one million dollars must also make sacrifices, but Republicans are unwilling to make concessions." Republican Congressman Hensarling said: "No one is willing to make concessions. The deficit reduction committee is deadlocked because it has not seized the opportunity." Defense Secretary Pennida and many lawmakers believe that starting automatic budget cuts will have disastrous consequences for the Pentagon and other government agencies.