WASHINGTON, Nov. 20 (UPI) -- Economist Mark Zandi said Sunday he thinks the congressional supercommittee won't be able to reach a deal to cut the U.S. deficit as this week's deadline looms.
He gave his prediction after a discussion by key members of the committee, Rep. Jeb Hensarling, R-Texas, and Rep. Xavier Becerra, D-Calif., on "Fox News Sunday." Zandi originally thought a partial deal would be more likely.
Zandi, of Moody Analytics, said a combination of spending cuts and increasing taxes on the wealthy would be the best way to reduce the deficit before the Wednesday deadline.
"I think we came to terms around the debt ceiling debate back in August that we needed $4 trillion in 10-year deficit reduction. And I think the most logical approach would be about $3 trillion. That $4 trillion should be government spending cuts and $1 trillion should be additional tax revenue," he said on "Fox News Sunday." "So, we need both. We're not going to accomplish this until they come to that realization."
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Zandi predicted if a deal isn't agreed upon there wouldn't be much of a reaction from the stock market because expectations have been low.
"It's all relative to expectations and investor expectations with regard to the committee I think are -- have been and are still very, very low. I don't think many expected much to come out of the process."
The United States' credit rating also shouldn't be impacted, Zandi said, because the so-called "trigger mechanism" that would take place if the supercommittee fails to pass a deal. About $1.2 trillion in spending cuts would automatically take place.
"I do think that in current law, if policy makers do nothing, we're going to achieve that $4 trillion in 10-year deficit reduction and then some, right? Because we do get those automatic spending cuts that begin in 2013 and the Bush tax cuts, they expire at the end of 2012. So, everybody's tax rates are going to go up on January 1st, 2013. That's a lot of revenue and that's more than we need to achieve the goal of $4 trillion," he said.
