* Becerra says Friday is pivotal day
* Failure wouldn't have immediate consequences
* Democrats, Republicans emphasize differences
(Adds quotes, analyst, detail)
By Richard Cowan and Patrick Temple-West
WASHINGTON (Reuters) - A high-profile congressional
effort to trim stubborn U.S. budget deficits appeared near
collapse Friday as Democratic and Republican lawmakers were
unable to agree on tax increases and benefit cuts.
A 12-member "super committee" has until midnight
Wednesday to strike a deal that would save at least $1.2
trillion over 10 years. Members say they think a deal is still
possible, but aides privately are more pessimistic.
The panel must hold an up-or-down vote by Nov. 23 but will
need to have a deal in place well before then. Friday is
shaping up to be a pivotal day, one member said.
"We should know by the end of today, and I'll give myself
until 11:59 p.m., as to whether or not
there will be a deal," said Democratic Representative Xavier
The group plans to meet Friday and will work through the
weekend if necessary, said Republican Representative Jeb
Hensarling, a committee co-chair.
"We are painfully aware of the deadline and it is staring
us in the face," he told reporters.
Unlike budget standoffs in April and August, failure would
not lead to a government shutdown or a sovereign debt default.
Instead, automatic spending cuts of $1.2 trillion over 10
years, split evenly between military and domestic programs,
would kick in starting in 2013.
A senior Democratic aide said the two sides are nowhere
near an agreement.
Congress is already facing rock-bottom approval ratings
after a year of down-to-the-wire budget battles, and failure to
reach a deal would likely incite further disgust among voters
as the 2012 election season heats up.
"A failure probably would improve the Democrats' narrative
that obstructionist Republicans are impossible to deal with.
But there will be plenty of blame to go around," said Greg
Valliere, chief political strategist with analysis firm Potomac
BUSH TAX CUTS A FACTOR
Many Republicans worry that the automatic cuts to military
programs could compromise national security. Senator Patrick
Toomey, a leading Republican on the super committee, said
Thursday he would try to modify them, presumably to ease their
impact on the military.
Democrats feel less urgency as programs for the poor and
the elderly, such as Medicare and food stamps, would be largely
shielded from the cuts.
They also see an advantage as temporary tax cuts enacted
under President George Bush are due to expire at the end of
2012 and Republicans are eager to forge a deal that would
overhaul the tax code before then in order to avoid a higher
tax burden on the wealthy.
Republicans have said they could support some tax increases
in return for an overhaul of benefits like Medicare that are
expected to expand dramatically as the population ages.
In a Friday morning meeting, pollsters told Democrats that
retirees have little enthusiasm for changing Medicare and other
Democrats also hope to include measures to stimulate the
The panel must release any plan it comes up with at least
48 hours before a vote. That would point to Monday as a final
deadline, but lawmakers must give budget analysts time to
crunch the numbers as well. Several members said they hoped to
have a framework in place by the end of the day.
"Certainly as you get to the midnight hour, pressure goes
up," Democratic Representative Chris Van Hollen said.
MARKET REACTION UNCLEAR
It's not clear how investors would react to failure.
Markets plunged in August after a divisive battle over
extending the government's borrowing authority prompted ratings
agency Standard & Poor's to issue a first-ever U.S. debt
downgrade. The other two major agencies have said they would
not necessarily follow suit if the super committee deadlocks,
as long as the automatic cuts are allowed to kick in.
Investor expectations are extremely low, which might limit
the scope of market reaction. Most are distracted by the
ongoing debt crisis in Europe, which may ensure a safe-haven
bid for Treasury bonds and the dollar even if the committee
fails to agree on substantive cuts.
However, the automatic cuts may be seen as another negative
for the U.S. economy and could roil the stock market.
Failure to reach a deal also would make it harder for
Congress to extend a range of provisions, from payroll tax cuts
to enhanced unemployment benefits, due to expire at the end of
the year. Economists warn that the economy could suffer if
those measures are not kept in place.
There is a third option. Super committee members could set
aside divisive issues like taxes and benefits and put together
a much smaller package containing measures both sides easily
can agree upon, such as selling off radio and television
frequencies and cutting federal pensions and farm subsidies.
That would reduce the severity of automatic spending cuts.
(Additional reporting by Thomas Ferraro, Rachelle Younglai and
Doina Chiacu in Washington and Steven C. Johnson in New York;
Writing by Andy Sullivan; Editing by Deborah Charles and Xavier
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