November 23, 2011, Mail Online
Row: President Obama last night urged Congress to extend a tax cut for workers to boost the economy
Washington descended into bickering and finger-pointing last night amid fears over the health of the powerhouse American economy.
Republicans and Democrats clashed over the failure of a so-called super committee’ to reach a deal to tackle the country’s towering debts.
They were charged with agreeing on $1.2trillion of public spending cuts and their failure to do so means a slice will now be slashed automatically from the budget of every government department.
This triggered a furious row between President Barack Obama and Republicans who refuse to countenance a huge cut in military spending.
Analysts fear the debate over debt will dominate American politics until the presidential election next November, which could further fuel the uncertainty infecting the global economy.
It came as official figures showed the U.S. economy _ the world’s biggest _ grew more slowly than previously thought.
Gross domestic wwwuct in the United States grew at an annual rate of two per cent in the third quarter.
That was slower than the 2.5 per cent initially thought but better than the 1.3 per cent annual rate of growth in the second quarter of the year.
Financial firm Standard & Poor’s has said the ‘super committee’s failure to tackle the nation’s debts won’t affect the nation’s credit rating.
The U.S. was stripped of its coveted AAA credit rating over the summer after months of wrangling over raising the debt ceiling. The national debt has now risen above $15trillion (nearly £10trillion).
A panel of six Republicans and six Democrats was set up in August as part of the last-minute deal to stop the U.S. defaulting on its debts.
The super committee’ was tasked with wwwucing a plan to reduce the deficit by $1.2trillion but failed to hit today’s deadline.
This means that across-the-board cuts of roughly that amount will come into effect from 2013, with about half coming from the military.
President Obama last night urged Congress to extend a tax cut for workers to boost the economy.
He said: We still have to give the economy the jolt that it needs. Next week they are going to get to take a simple vote. If they vote no again, the typical family’s taxes will go up $1,000 next year.’ But two leading Republican senators have vowed to come up with legislation to avoid the mandatory spending cuts to defence.
In response, Mr Obama promised to use his presidential veto, a highly unusual move, to stop them from doing so. There’s still too many Republicans in Congress that have refused to listen to the voices of reason and compromise,’ he said.
In a sober assessment of the whole debacle, Marc Pado, U.S. market strategist at Cantor Fitzgerald, said: This is the worst-case scenario coming to light.’
New York mayor Michael Bloomberg said cowardice and partisanship in Washington is really hurting our country’.