No one is surprised by this outcome, least of all COTTonLINE. The two parties have very different ideas about what the federal government should accomplish and how big it should be.
The first, and perhaps only, law of politics is to be reelected. Each party's representatives on the committee could see that caving in to the other side would be career suicide, so they did not cave. Any other behavior would have been quite strange.
If, in January 2013, we have Republican control of both houses of Congress and the presidency, then it will be possible to act to reduce governmental size. I say "possible," but when those conditions pertained in the Bush administration it did not happen.