All eyes in Washington, D.C. are now on the November elections to see who wins the White House and control of the two chambers of the U.S. Congress.
Senior congressional Republicans say they may have to agree to revenue increases to unravel planned sequestration cuts if President Obama wins a second term. Tax increases would most likely fall on the wealthy, defined as household income above $250,000.
As reported last week in RotorNews®, the extension of the payroll tax holiday is likely to fall by the wayside. Few lawmakers have expressed interest in extending the temporary tax holiday, meaning that as many as 160 million Americans could see their taxes go up in 2013, even if Congress extends some or all of the Bush-era income-tax cuts.
Meanwhile, lawmakers may be considering yet another trigger mechanism – similar to the sequester – to update the tax code and deal with expiring tax provisions that are a part of the “fiscal cliff.”
“There would be consequences for failure to achieve the results,” said Sen. Kent Conrad (D-N.D.), the Budget Committee chairman and a proponent of the trigger plan.
Rep. Kevin Brady (R-Texas), a senior member of the House of Representatives Ways and Means Committee, was skeptical of another trigger. “Watching how this has worked with the Budget Control Act, how it’s unfolding, I think there’s more skepticism about those procedural issues.”
But there is no consensus on how to proceed, with many awaiting marching orders from either a reelected President Barack Obama or a President-elect Mitt Romney in the lame-duck session of Congress. Republicans are split on whether to accept any new tax revenues as part of a deal, and Democrats are divided on whether to push for a grand deal with entitlement cuts if Republicans will agree to new revenues.
Meanwhile, the effects of Congress’ last trigger remain. On Sept. 20, for instance, 131 U.S. mayors wrote to congressional leadership to discuss the havoc the sequestration process would wreak on their cities. “We are particularly concerned with deep reductions in non-defense discretionary spending, one-third of which is directed to state and local programs.”
Education stands to take the brunt of the hit, according to the mayors, with 36 percent of the sequester-related cuts going to state and local programs.
“Any federal budget solution that does not make the necessary federal investments in metro infrastructure, education, and public safety will impede the national economic growth necessary for our nation to maintain global competitiveness and future fiscal health,” they wrote.