The U.S. Senate Finance Committee scheduled a trio of meetings to discuss the looming “fiscal cliff” and other economic issues on Wed., Sept. 19. The senators met with Federal Reserve Chairman Ben Bernanke, Congressional Budget Office Director Dough Elmendorf, and Thomas Barthold, chief of staff on the Joint Committee on Taxation. The meeting provided Bernanke with another opportunity to hammer home a message he has been broadcasting all year: deal with the end-of-year spending cuts and expiring tax cuts or risk dealing the country a devastating economic blow.
According to the Bank of America Merrill Lynch fund manager survey for September, more investors are concerned about the fiscal cliff – a combination of tax increases and spending cuts that will kick in on Jan. 2 if Congress fails to act – than the European sovereign debt crisis. Thirty-five percent of global investors see the fiscal cliff as the biggest risk, compared with 33 percent who are most concerned about the eurozone crisis.
The House of Representatives considered a bill reauthorizing the Federal Emergency Management Agency (FEMA) on Sept. 19 under suspension. The measure makes tweaks to modernize and reform the agency, keeps funding at about $2.2 billion over the next two years, and streamlines recovery efforts.
Sens. Claire McCaskill (D-Mo.) and John Thune (R-S.D.) are racing to get their bill to exempt U.S. operators from the European Union’s emissions scheme before it is too late. The measure is scheduled to be “hotlined” in the Senate.
The Senate Finance Committee’s tax-extender intended to achieve the goal of comprehensive tax reform come 2013, but instead highlights the difficulties of overhauling the tax code. It is unlikely the measure will reach the Senate floor this week, meaning the next time it could be considered would be the already packed lame-duck session of Congress after the November elections.
Capitol Hill staffers and tax lobbyists all agree that tax reform in 2013 will involve some trade-off between lowering the tax rates in exchange for eliminating big swaths of tax breaks.
Some of the most expensive tax breaks on the books currently go toward politically popular items, such as the mortgage-interest deduction, or breaks to those employers that offer health insurance.
There also does not seem to be much political will for tackling tax extenders before the election, despite the multiple meetings that the Senate Finance Committee will convene on Wednesday regarding the fiscal cliff.
Even with all of these issues on the burner, the only matter Congress truly needs to address before adjourning until November is the continuing resolution to fund the federal government.