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Tuesday
Nov222011

'Super Failure': Burden On Congress to Prevent Scheduled Tax Increases

iStockphoto/Thinkstock(WASHINGTON) -- Now that the 12-member congressional “supercommittee” has announced its failure to produce an all-encompassing, deficit-reduction package before its Wednesday deadline, the full Congress faces deadlines of its own.

Before lawmakers pack up for Christmas, they must first decide whether to extend the payroll tax break and long-term unemployment benefits, both of which expire Dec. 31.

“I find it very hard to believe they would end the benefits altogether,” said Dean Baker, the co-director of the Center for Economic and Policy Research. “I don’t think they want to have more people see more money pulled out of their paycheck come Jan. 1.”

President Obama jetted to New Hampshire Tuesday to urge Congress, or more pointedly, Republicans in Congress, to extend the two-percent payroll tax cut that he championed last year. That lower rate, which Obama said put about $1,000 into the average American’s pocket in 2010, is set to rise back to 6.2 percent in 2013.

In the president’s jobs plan, he not only extends the payroll tax cut, but further decreases the rate from the current 4.2 percent down to 3.1 percent.

Obama’s American Jobs Act was blocked by Republicans in both the House and Senate. He has since tried to push pieces of it through Congress. After successfully passing a veterans’ benefits bill earlier this month, Obama said he will push for a vote on the payroll tax extension shortly after Thanksgiving.

With the House set to adjourn for the winter holidays Dec. 8, Congress will have just two weeks between Thanksgiving and Christmas to deal with not only a payroll tax extension, but also the rather costly long-term unemployment insurance benefits.

Congress has extended such benefits twice in the past four years, but with austerity being the name of the game on Capitol Hill these days, the question will not be whether to extend them, but how to pay for them.

About 3.5 million Americans have received the long-term unemployment insurance, which extends the maximum number of weeks that the unemployed can collect benefits from a maximum of 26 weeks to, in some states, 99 weeks.

Both payroll tax rates and unemployment benefits were expected to be included in the supercommittee’s plan to reduce deficits by $1.2 trillion in five years.

Now that the committee has abandoned any hope of reaching a deal, these two measures could be rolled into the third, and arguably most important, item on Congress’s pre-Christmas to-do list: to pass a budget.

The current continuing resolution expires Dec. 16, giving Congress three weeks to agree to a bill that will fund the government through the new year.

“These are all fairly clear items,” Baker said. “They know what they’re talking about and both sides have probably already thought through the next step. I would be very surprised if they don’t pass.”

Copyright 2011 ABC News Radio







ABC News Radio