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Will deficit committee failure rattle Wall Street?

November 20, 2011|By Michael A. Memoli | Washington Bureau
  • Sen. John F. Kerry (D-Mass.), a member of the deficit "super committee," speaks on NBC's "Meet The Press" Sunday.
Sen. John F. Kerry (D-Mass.), a member of the deficit "super committee,"… (William B. Plowman/NBC…)

Members of the congressional "super committee" expressed hope Sunday that the latest Washington stalemate would not further rattle the financial markets.

Lawmakers have until end of day Monday to put forward a deficit-reduction plan. If the 12-member panel fails, the so-called "trigger" would be activated, resulting in $1.2 trillion in cuts to domestic and defense budgets.

"I don't know what the impact in the market will be," Rep. Jeb Hensarling (R-Texas), co-chair of the super committee, said on "Fox News Sunday." "I would hope there wouldn't be again an adverse impact in the sense that the American people are still going to get the deficit reduction that was contemplated under the law. But it is a huge blown opportunity."

Sen. John F. Kerry (D-Mass.) was more dire on the need for compromise, particularly amid talk of undoing the triggers with regard to Pentagon cuts.

"There is a real threat that not only will there be a downgrade but that the market on Monday will look again at Washington and say, you guys can't get the job done. And just the political confusion and gridlock is enough to say to the world, America can't get its act together," he said.

Wall Street has indicated the super committee’s inability to strike a deal would not seriously upend the financial markets, even though retailers are concerned that failure from Washington could dampen consumer confidence before Black Friday launches the holiday shopping season.

"I don't think many expected much to come out of the process," Mark Zandi, chief economist for Moody's Analytics, said on Fox. "So at the end of the day, I don't think there'll be a significant market reaction."

"Now, I do think, however, because it looks like the committee is going to punt, that we've got some bigger problems ahead of us," he added. "Those could be inflection points for the financial markets. So, we are not out of the woods yet that we could still have some problems. In fact, I would count on it."

If Congress does seek to undo the trigger and nullify the $1.2 trillion in cuts, "then, financial markets are going to become very unruly," Zandi said.

Sen. Pat Toomey (R-Pa.) said on CBS' "Face The Nation" that the cuts "need to be reconfigured," but not abandoned.

Lisa Mascaro contributed to this report.

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