Thaindian News

Washington, Nov 22 (IANS) As a congressional “super committee” failed to forge a deal to reduce America’s swelling deficit, Democrats and Republicans traded blame, but also called for renewed efforts to prevent painful automatic budget cuts starting January 2013.

Accusing Republicans in Congress of rejecting what he called a balanced approach to deficit reduction that included tax increases on the wealthy, President Barack Obama Obama Monday vowed to veto any attempt to get rid of automatic spending cuts if Congress fails to act.

“Despite the broad agreement that exists for such an approach, there are still too many Republicans in Congress that have refused to listen to the voices of reason and compromise that are coming from outside of Washington,” he told reporters after the super committee announced its failure.

“The only way these spending cuts will not take place is if Congress gets back to work and agrees on a balanced plan to reduce the deficit by at least $1.2 trillion,” he said. “That’s exactly what they need to do. That’s the job they promised to do. And they’ve still got a year to figure it out.”

Obama also sought to reassure markets and ratings agencies that even without an agreement by the special committee, the automatic cuts now scheduled to occur mean significant deficit reduction steps will take place.

“One way or another, we will be trimming the deficit by at least $2.2 trillion over the next 10 years,” he said, referring to a previous agreement for cutting $1 trillion in spending and the required $1.2 trillion in further cuts triggered by the committee’s failure.

Earlier, admitting failure, the bipartisan special joint committee said that “after months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee’s deadline.”

Markets dropped as news spread of the panel’s expected failure. The Dow Jones Industrial Average fell 248 points Monday, with a minor recovery after being down more than 300 points earlier in the afternoon.

The ratings agency Standard & Poor’s issued a statement Monday saying the committee’s failure to reach agreement would not bring a downgrade of the US credit rating, as long as the resulting automatic spending cuts remain intact.

(Arun Kumar can be contacted at arun.kumar@ians.in)