The deficit reduction super committee on Capitol Hill has until Oct. 23 to reach agreement on reducing the federal deficit by at least $1.2 trillion. Optimism that they will succeed is beginning to wane. Alex Bolton, senior staff writer for The Hill newspaper, talks with WAMU All Things Considered host Pat Brogan about the consequences of not reaching the deal, including its potential effect on the U.S. military.
The prospects of reaching a deal
Steny Hoyer, the second ranking Democrat in the House said Tuesday he is not confident that they will reach a deal by the deadline. He says he is hopeful, but that was not the same as confidence. "That may be the most honest admission from any leader that there are growing doubts about the success of this deficit reduction super committee," says Bolton.
There were indications before today that leaders were skeptical. Aides to Senate Republican leader Mitch McConnell and John Kyle reportedly met with lobbyists in September and voiced their skepticism about getting a deal. The stumbling point is whether to focus on cutting entitlements, which Democrats don't want to do, or raising taxes, which Republicans don't want to do.
Who loses the most if a deal isn't struck?
The Defense Department stands to lose the most if the super committee can't make a deal happen. If there is no deal, $1.2 trillion in automatic cuts would be triggered, and half of that would come from the Defense Department. That would come on top of the $450 billion savings that the Pentagon has already agreed to over 10 years.
There are experts on both sides of the aisle who are concerned. Dick Cheney did said in an interview with Sirius FM that those kind of cuts would be devastating to the military. Secretary of Defense Leon Panetta says the same thing.
"Because the cuts wouldn't happen until the beginning of 2013 -- that is when the spending caps would be put in place -- it's unlikely to affect the war in Afghanistan in the short term," says Bolton. The expectation is that there will be a major drawdown in troops by then, but Bolton says these cuts would affect the ability of the U.S. military to fight two major land wars at the same time.
The prospects of a credit downgrade
Wall Street is growing increasingly concerned about the prospect of a credit downgrade. Merrill Lynch put out a report that says that a credit downgrade is likely. They predict that the super committee won't be able to get the deal done. Credit agencies have warned that such a failure will result in a downgrade, according to Bolton.