- NEW: Kyl "pretty doubtful" a last-minute deal will be reached
- The committee faces a practical deadline of Monday to make a proposal public
- If the panel fails to agree, across-the-board cuts will follow
- Democrats balked Friday at a $640 billion GOP proposal
Sen. Jon Kyl, a member of the congressional committee created to craft a bipartisan deficit reduction deal, said Saturday the group will work until Monday's deadline, but it's "pretty doubtful" the bipartisan panel will forge a last-minute compromise.
Although the 12-member panel technically has until Wednesday to finish its work, it faces a practical deadline of Monday to make a proposal public to trim $1.2 trillion from the deficit over 10 years, then send it to the nonpartisan Congressional Budget Office for review. Congress must then vote on the deal, which couldn't be amended, by December 23.
"The hope was that even at this late date, they could take things that had been scored and put them together," Kyl, R-Arizona, told reporters at the Capitol on Saturday. "I think that's pretty doubtful at this point, but obviously no one wants to quit until the stroke of midnight."
Kyl noted that the last proposal the GOP floated to Democrats as a "last ditch effort" was a package of $640 billion in mandatory spending cuts and some revenue from closing one tax loophole for corporate jet owners, along with some government fees. This would only address about half of the super committee's mandate to cut at least $1.2 trillion over the next 10 years.
"We thought maybe that was a way to at least accomplish something and not come away with a goose egg, but it has been rejected," Kyl said.
Perhaps signaling resignation, Kyl pointed out that even if the 12-member panel fails to come up with a deal, the law creating the super committee requires automatic spending cuts to kick in starting in 2013, evenly divided between defense and nondefense spending.
"It would be better if we could reach an agreement on how to do it, but if we don't, there's the sequester that automatically occurs. So we're going to be reducing spending by $1.2 trillion no matter what," Kyl said.
On Friday, panel members acknowledged that time was running out, but said they were still working in hopes of a deal.
While Democrats have expressed concern about deep cuts in social spending, programs such as Social Security, Medicaid, food stamps and veterans' benefits would be spared the budget ax. Defense Secretary Leon Panetta warned Congress this week that such cuts could cripple the American military establishment.
On Friday, Republicans floated the $640 billion package, including roughly $540 billion in savings and fees, that would allow negotiators to claim at least partial success and hold down the amount of the automatic cuts.
But Democrats on the committee responded that the proposal does not contain enough "shared sacrifice" in the form of higher taxes on the wealthy, according to sources.
"No person could look at that (alternative plan) and say it met the test of fairness and balance," said Rep. Chris Van Hollen, D-Maryland.
Democrats have proposed a solution that would generate $400 million from increased tax collections and $700 billion in spending meant to jump-start the economy, including an extension of the payroll tax cut, extended unemployment benefit payments and money to permanently prevent cuts in payments to doctors who treat Medicare patients.
Democrats want to offset those costs with money saved from winding down the wars in Iraq and Afghanistan, a move some legislators in both parties characterize as an accounting gimmick.
One question hanging over the talks is how financial markets would react if a deal is not reached. Wall Street has already factored in low expectations for the super committee, partially due to the near-disastrous brinksmanship that accompanied this past summer's debt ceiling debate, analysts said Friday.
If the panel can agree on a full package, the market reaction will probably be "a great big yawn," said Adrian Cronje, chief investment officer of Balentine, an investment advisory firm.
If the panel fails to reach a deal, "global and U.S. investors will continue to be disappointed in U.S. fiscal policy but will (also) look at Europe and Japan and not see governments with unassailable credit ratings in the future," said Steve Van Order, fixed income strategist at Calvert Investments.