U.S. debt panel to admit defeat on Monday
A congressional 'super committee' is expected to formally announce on Monday that its three-month-long effort to forge a $1.2 trillion deficit reduction plan has failed, aides told Reuters.
Barring an unforeseen development, the Republican and Democratic heads of a 12-member 'super committee' will issue a joint statement conceding failure, the aides said.
Failure has been expected for most of the weekend, and market reaction may be muted as investors focus on the euro zone debt crisis.
U.S. stock index futures opened lower on Sunday as trading began in Asia, with Dow Jones and S&P 500 futures briefly dropping more than 1 percent.
Failure by the committee of six Republicans and six Democrats could cement notions of a dysfunctional Washington among voters and investors.
"Congress is missing the opportunity to provide a credible plan to the markets," said Paul Ballew, chief economist at Nationwide Insurance. "About the last thing we need is more uncertainty."
Congress has rock-bottom approval ratings after a year of budget fights pushed the government to the brink of a shutdown and led to the first-ever downgrade of its AAA credit rating by Standard & Poor's.
Automatic spending cuts totaling $1.2 trillion, falling equally on the military and domestic programs, will kick in starting in 2013 to ensure the United States takes some steps toward reining in its spiraling debt.
Given unusual powers, the committee was seen by many as the best chance in the near term for the United States to get control of a national debt which crossed the $15 trillion mark last week and now equals the size of its economy.
Democrats and Republicans on the panel deadlocked over two central issues: taxes and benefit programs.
After giving ground on spending cuts in earlier budget battles, Democrats said any deal this time would have to include an equal amount of tax hikes, especially on the wealthy.
Republicans moved from their previous no-new-tax stance, but pressed for a fundamental overhaul of health programs like Medicare that are expected to balloon in cost over the coming decades as the population ages.
Investors fear the gridlock may hurt President Barack Obama's efforts to extend a temporary payroll tax cut and enhanced jobless benefits.
Withdrawing that stimulus could push the United States back toward recession, economists say.
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