Supercommittee failure could trigger US credit downgrade, economists warn

guardian.uk.co ^ | 11/18/11 | Dominic Rushe

[ColdOne]

Economists are warning of dire consequences if US politicians fail to make progress this weekend in tense talks aimed at reducing America's massive deficit ahead of a Wednesday deadline.

The bi-partisan congressional super-committee is charged with drawing up plans for a $1.2tn reduction in the nation's deficit by the middle of next week. Failure to do so will trigger an automatic "sequester" that will make cuts of that size to defence and social welfare programmes starting in 2013. But the two sides seem far from finding a solution after clashing over tax revenues.

[Mike Darancette]

For revenue they should offer repatriation of offshore dollars at 10% tax year 1, 11% tax year 2, .... up to 20% tax in year 10. After that back to where it is now. That’s how you make revenue from a tax cut while helping the economy

[RagingBull]

It was (and continues to be) my belief that the super committee wouldn't accomplish anything and the automatic cuts would (will) quietly be rescinded.

Same stuff, different day, higher debt limit

[flaglady47]

“Someone wants to downgrade us? Fine. They’re just along for the ride too.”

This is just a crock. If the Super Committee fails to produce the cuts, there are automatic cuts that are triggered, so where is the beef to the economists? The cuts still take place, the only difference is where those cuts will be made. But a cut is a cut is a cut. So why would the economists threaten downgrades if cuts are being made, one way or the other?

So if Moody’s, S&Poor’s, etc. downgrade, they are doing it for reasons other than a lack of cuts. They are doing it for political reasons, or as a power trip, or to get revenge for the gov’t going after them for their prior lousy forecasts, or just because they want headlines. Whatever the true reason, it isn’t because of the cuts, or any lack thereof.

[newzjunkey]

The initial downgrade was blamed on especially strong partisan gridlock.

If the super committee comes up with nothing, that deal will have failed and underscore the same process problems.

In that light, another downgrade makes as much sense as the earlier one.

[ArcadeQuarters]

Boehner will get involved and will raise taxes now in exchange for fake spending cuts 10 years from now.

[frposty]

“This is just a crock”

Your entire post reinforces the notion that, yes, we’re just along for the ride now.