Supercommitte Fails to Reach Deal, Now What? [AUDIO]
Despite talks through the weekend, the congresssional committee that was supposed to reduce the deficit by $1.2 trillion over the next decade has not come to an agreement. The stalemate could trigger automatic spending cuts across the board in 2013 and could cause another downgrade of the nation’s credit rating.
But, Chairman of the Finance Department at Rider University Maury Randall said a lot hinges on next year’s election. “Who knows what they’re going to do? Will they go through with the cuts?” he said. “Are people going to go on one side or the other, do they want a different President who will adopt different policies? A lot of questions remain and the American people have to decide what they want to do.”
The cuts would be evenly divided between defense and domestic spending. The 12-member panel’s deadline for a final vote is Wednesday. In order to stave off automatic spending cuts, the committee must propose ways to reduce deficits by at least $1.2 trillion over 10 years. At least 7 of the 12 members must approve a plan in order to send it to the House and Senate for a vote.
“The fact that automatic cuts would be put off until the outcome of the next election means there is a great deal of uncertainty,” said Randall. “Will they continue the lower Bush tax rates or will they expire as scheduled and send those tax rates up? With questions like these looming, it makes it more difficult for companies to plan since they don’t know exactly what to plan for at this point.”
“Had something been decided, businesses would know what was coming and could plan accordingly,” Randall said. “Between this uncertainty and the negative news coming out of Europe, it’s making it a tough time for the stock market as well.”