Friday, April 13, 2012

Bush tax cuts: The real endgame

Congress has a way of waiting to the very last minute to resolve big issues, so December is usually a busy month on Capitol Hill. This year will be no exception. But next year? Next year will be no exception on steroids.

This December, for example, lawmakers will have to decide, among other things, whether to extend the payroll tax cut, long-term unemployment benefits, the Medicare "doc fix," Alternative Minimum Tax relief and a bevy of business tax breaks.

But that list -- worth less than $1 trillion -- will pale in comparison to the $5 trillion of fiscal decisions likely to be left for a lame-duck Congress during the seven weeks between the Nov. 6 election and New Year's Eve.

The biggest items on the agenda? The expiration of the Bush tax cuts and the impending enactment of the automatic spending cuts that many want to replace.

Coloring these decisions, of course, will be two unpredictable factors: The state of the economy and who wins control of the House, the Senate and, of course, the White House.

And the decisions Congress makes this year about whether to extend various expiring provisions may add to 2012's end-of-year to-do list for lawmakers.

"[T]he amount of expiring policies and spending cuts set to take effect over the next few years is large [and] the risk from a political impasse is not only that Congress fails to enact long-term fiscal reforms, but also that it fails to extend current policies and in doing so adds to the drag on growth from fiscal policy," Goldman Sachs wrote in a research note.

Source: Jeanne Sahadi @CNNMoney

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