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'Super-committee' on brink of US deficit failure 'Super-committee' on brink of US deficit failure
(about 1 hour later)
Talks in Washington aimed at cutting the US government's borrowing are on the verge of failure.Talks in Washington aimed at cutting the US government's borrowing are on the verge of failure.
A congressional "super-committee" had been charged with finding $1.2tn (£762bn) in savings to avoid automatic deep spending cuts.A congressional "super-committee" had been charged with finding $1.2tn (£762bn) in savings to avoid automatic deep spending cuts.
But the talks between Democrats and Republicans are widely reported in the US media to have collapsed, with formal confirmation expected later on Monday. But the talks between Democrats and Republicans are widely reported to have collapsed, with formal confirmation expected later on Monday.
Meanwhile, the US national debt has just risen above $15tn (£9.5tn).Meanwhile, the US national debt has just risen above $15tn (£9.5tn).
The deficit-reduction committee 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 potential default on US debt payments. The href="http://www.deficitreduction.gov/public/" >deficit-reduction committee 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 potential default on US debt payments.
Its members were instructed to find at least $1.2tn in savings by 23 November. If they failed to agree, they would have to face the prospect of being held responsible for automatic cuts to defence and domestic spending of an equivalent amount. Its members were instructed to find at least $1.2tn in savings by 23 November. That deadline is effectively Monday, as any plans agreed by the committee would need to be submitted for analysis by the Congressional Budget Office 48 hours before the formal deadline.
Much of the burden of the automatic cuts is expected to fall on the defence and national security budgets, despite the Pentagon already facing a $450bn reduction in its budget. Without an agreement, they face the prospect of being held responsible for automatic cuts totalling some $1tn to defence and domestic spending.
Much of the burden - almost $500bn - is expected to fall on the defence and national security budgets, despite the Pentagon already facing a $450bn reduction in its budget.
US Defence Secretary Leon Panetta has spoken out against the prospect of further defence cuts, saying they would "hollow" out US military capabilities.
'Little common ground''Little common ground'
The Republican and Democratic heads of the 12-member committee are expected to issue a statement later on Monday saying they have been unable to reach a deal.
Disagreements have centred on whether tax increases should form part of the budget reduction measures, with Democrats in favour of such rises but Republicans opposed.Disagreements have centred on whether tax increases should form part of the budget reduction measures, with Democrats in favour of such rises but Republicans opposed.
A last-minute proposal that included some new taxes raised hopes in the final week of negotiations, but could not muster enough support. Republicans are also seeking cuts in benefits and healthcare schemes including Medicare and Medicaid, programmes dear to Democrats.
Following weeks of negotiations, a last-minute proposal that included some new taxes raised hopes but could not muster enough support.
The Republican and Democratic heads of the 12-member committee are now expected to issue a statement later on Monday, probably after the US markets have closed, saying they have been unable to reach a deal.
On Friday, the committee's Republican co-chairman, Jeb Hensarling, told reporters that members would meet over the weekend if necessary to "try and find sufficient common ground".On Friday, the committee's Republican co-chairman, Jeb Hensarling, told reporters that members would meet over the weekend if necessary to "try and find sufficient common ground".
But on Sunday several committee members appeared on US political talk shows and confirmed that the panel's work had all but ended.But on Sunday several committee members appeared on US political talk shows and confirmed that the panel's work had all but ended.
Republicans had also demanded cuts in entitlement programmes, such as social security, Medicare and Medicaid - something that Democrats had shown willingness to permit, but only in return for tax rises on the rich that were not forthcoming from the other side. "Our Democratic friends were never able to do the entitlement reforms," Republican Senator Jon Kyl said on NBC TV. "They weren't going to do anything without raising taxes."
Democratic Senator Patty Murray, one of the committee's co-chairs, told CNN that the Republicans' position on taxes was the sticking point.
The wealthiest Americans, who earn over a million a year have to share too. And that line in the sand, we haven't seen Republicans willing to cross yet," she said.