The Washington Post is reporting that the congressional committee charged with reducing the federal deficit by $1.2 trillion by next week is poised to admit defeat as soon as Monday. If it does, the failure will set up a huge year-end battle over emergency jobless benefits and an expiring payroll tax holiday, the paper says.
Those provisions are among a host of measures set to lapse at the end of December. During nearly three months of negotiations, the “supercommittee” had been weighing whether to extend at least some of them as part of a broader plan to shave a minimum of $1.2 trillion over the next decade.
Democrats and many economists consider particularly urgent the need to extend jobless benefits and the one-year payroll tax cut. With national unemployment stuck at 9 percent, and the ranks of the long-term unemployed at record levels, the government is providing up to 99 weeks of support to about 3.5 million people.
Meanwhile, the payroll tax cut, enacted last December, allows most American workers to keep an additional 2 percent of their earnings, a boon to tight household budgets as well as the economic recovery. Economists at J.P. Morgan Chase recently estimated that if Congress does not extend the two measures, economic growth next year could take a hit of as much as two percentage points — enough to revive fears of a recession.
Time is also running out for doctors who see Medicare patients. These physicians are scheduled to absorb a 30 percent cut in government reimbursements in January. A long list of tax breaks, including an inflation adjustment that protects more than 30 million families from paying the alternative minimum tax, also will be eliminated unless Congress acts.
Would it be harsh to say that this was not unexpected? Last summer's grueling debt-ceiling negotiations set the stage for this predictable impasse. While President Barack Obama has been wise to take a hands-off approach during the recent negotiations to avoid a Republican backlash, it looks as if he will have to wade into the fray after all, because it's apparent his leadership is needed.
Read more at the Washington Post.