Negotiations continue in Washington as the lame-duck session of Congress struggles with whether to extend the Bush-era tax cuts and head off deep, automatic budget cuts.
A deadline looms.
Tax cuts enacted during the presidency of George W. Bush will expire at the end of the year if Congress fails to act. Since Congress failed to reach agreement on how to reduce the federal deficit earlier, approximately $1 trillion in automatic budget cuts will go into effect in the new year, split evenly between domestic and defense programs.
Sen. Ben Nelson, a Democrat, says it is unrealistic to believe a Congress that has put off dealing with the $16 trillion national debt for the past year and a half will be able to deal with it in the next 30 days. Nelson even questions whether it would be wise.
“How can you carefully craft a package between now and the end of the year?” Nelson says. “You can throw something together, but I don’t know how you can carefully craft something that’s not going to do damage.”
Nelson regrets the time squandered.
“This is something that we’ve had a year and a half to do and Congress dawdled,” he says.
Sen. Mike Johanns, a Republican, agrees with Nelson that Congress has failed to act, but says action is needed during the lame-duck session.
“The one thing that we do know is that inaction does have consequences,” according to Johanns. “We face some very, very tough issues if action is not taken by the first of the year.”
Many economists predict that if Congress does nothing, the country could be thrown back into recession, the so-called “fiscal cliff” argument. Those economists argue that the dual shock of higher taxes and drastic budget cuts would undercut the economy, causing it to fall drastically.
Johanns says a bridge is needed to the new Congress, which he says should spend all of next year addressing tax and spending issues.
“What we really need to do, I believe, again is put something in place that works for the end of the year, but then go about reforming our tax code,” Johanns says. “The tax code, really by I think everybody’s agreement, is a mess.”
Johanns says Congress should dedicate 2013 to resolving the country’s financial problems.