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11/22/11

USA: Super committee squandered a rare opportunity to take major action against the United States' fiscal problems

One thing is that is absolutely certain is that Democrats and Republicans will use the super committee's dead end for political gain. Democrats are saying the outcome is further evidence Republicans just want to protect the rich from sharing the burden of deficit reduction. Republicans will argue that, once again, Democrats fail to grasp the gravity of escalating costs of healthcare benefits.

The White House has been bracing for days for the committee's failure and believes President Barack Obama can weather it without major political fallout and that he may even be able to score points against Republicans as he seeks re-election. Aides believe Obama will be able to seize the chance to further paint Republicans as obstructionist, a strategy they hope will be more potent because of polls showing most voters back his proposal to increase taxes on wealthier Americans.

The committee's failure could trigger another downgrade of the U.S. credit rating. Rating agencies, however, have said they will look at a range of factors in making any decision but that the committee's washout will not be decisive.

One thing is certain: The super committee disbanding without having agreed on one penny of deficit-reduction. Instead, it will have actually contributed to the government's $1 trillion-a-year budget deficits, having spent government funds paying for staff and other expenses.

Note EU-Digest: Watching CNBC Squawk Box this morning in trying to get some more insight as to the Super Committee's collapse it was surprising to see how little discussion there was about what, without doubt, is a major setback for the US economy. Instead the Squawk Box TV commentators seemed more interested to talk and joke in detail about the quality of their $70.00 hair cuts. Maybe it shows how irrelevant the political establishment has become in comparison to the the financial community ?

EU-Digest

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