The Congressional Committee of twelve, the famed Super Committee, does not seem as "super" as it once did. Formed to revive the budget-cut stalemate that Congress could not overcome as a whole, the Super Committee is proving that partisanship rules no matter the size. As the clock ticks down to the impending deadline, states anxiously await a decision that will certainly impact their financial futures.

In a last-ditch attempt to force negotiations, Congress and the President encouraged uninterrupted talks today, the end of which was marked by the 12-member panel silently emerging from the prolonged talks, looking exhausted. Despite early promises of success by the appointment members, many analysts now believe that the prospect of an agreement is slim at best. Although both parties scheduled a number of meetings this week to facilitate a plan, the looming midnight deadline on Wednesday makes that prospect more and more bleak.

If recommendations are not created or approved, it triggers an automatic $1 trillion spending cut unless a balanced budget amendment to the Constitution is sent to the states for ratification. With pressure mounting, the effects of no agreement are already popping up nationwide. Although there are a few rumblings of the possibility of introducing a balanced budget amendment, the more common contingency plan for lawmakers involve ways to delay or undo some of the automatic cuts embedded in the fallback plan, especially the defense budget. Since the cuts do not trigger until 2013, agencies are planning to stop those cuts, including Rep. Michael Conoway of the Armed Services Committee, who stated "[M]ost of us will move heaven and earth to find an alternative that prevents a sequester from happening."

As Americans wait, so too do investors, both domestic and foreign. The inability to reach an agreement between the twelve lawmakers is symbolic of the inability of our representatives as a whole to come together to decide the financial future of the nation. These political failures have a broader effect on overall business and consumer confidence, both nationally and internationally. If investors are worried that Washington cannot reach agreements, it may limit the willingness to invest in the U.S. globally. Additionally, whether the credit rating agencies will revisit the ratings previously assigned to the U.S. in response to the super committee failure remains another concern for lawmakers and foreign investors. 

Uncertainty still rules as federal and state agencies prepare for the possibility of automatic cuts. Developing contingency plans will not erase the financial repercussions of either, but may mitigate the many effects commentators suggest could arise. State lawmakers and consumers fear rising interest rates, a double dip recession, and continued employment rate stagnation. As the super committee races against the clock, Americans brace for the worst.

Filed Under : Federal Government Impact

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