Super Committee's Failure Leaves Orphaned Programs Behind
WASHINGTON -- Throughout the super committee's deliberations, impending "automatic, across-the-board cuts" were routinely cited as a driving motivation for its members to come to a compromise, even though the cuts won't take effect until 2013 and Congress is already showing signs of wanting to undo them.
But the failure of the panel, formally known as the Joint Select Committee on Deficit Reduction, has left behind a separate house full of orphans that Congress must find a way to deal with before January 1, or else taxes will soar on the middle class, jobless benefits will expire and doctors will see their reimbursement rate slashed by nearly a third, threatening elderly access to health care.
"After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee’s deadline," the committee's co-chairs, Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Texas) said in a statement on Monday.
Congressional leaders haven't said what exactly they plan to do now that the committee has failed, but lawmakers might be able to save these policies by attaching them to a new "continuing resolution" to fund government operations when the current CR expires on Dec. 16. If Congress doesn't get it done somehow or other, 1.8 million people out of work longer than six months will see their unemployment benefits run out in January.
"We're obviously disappointed because it was a very good opportunity to address the very pressing needs of the unemployed," said Judy Conti, a lobbyist for the National Employment Law Project, a worker research and advocacy group. But Conti said the super committee's failure hasn't left her team despondent, since the need to reauthorize benefits has at least been baked into the conventional wisdom. "It's very clear UI was very much in consideration [within the super committee]. Both sides of the aisle thought this was a good vehicle to take care of this. Already everybody has shifted to what is the best way to take care for this."
Currently 3.5 million long-term jobless receive aid under either Emergency Unemployment Compensation or Extended Benefits, programs that kick in for jobless workers who use up 26 weeks of state benefits, down from nearly 5 million this time last year. Some 17 million have received checks under the programs since 2008, according to NELP.
When the benefits were reauthorized alongside the Bush tax cuts in December, House Democrats doubted the wisdom of doing the tax cuts for two years and the benefits for just one. Without lower taxes as leverage, Democrats knew they would have to find another way to win the support of Republicans who'd be in charge of the lower chamber.
"We're gonna be fighting that one this time next year, right in the middle of when they're in control," Rep. Jim McDermott (D-Wash.) said at the time. "What chance do we have then? Zero."
The Obama administration has adopted a fiscally conservative tone, saying it wants to renew the expiring programs without adding to the budget deficit. President Obama believes the initiatives "should be paid for by asking millionaires and billionaires to pay a little bit extra," White House Press Secretary Jay Carney said Monday. But Democrats in the House and Senate have introduced bills to preserve the benefits without paying for them.
For its part, NELP has also softened its opposition to offsetting the benefits, which the White House has estimated would run $49 billion for 2012.
People who do have jobs will be hit, too, by two major pieces of expiring tax policy: the alternative minimum tax and the president's payroll tax cut. Economists worry dropping the benefits and the payroll tax cut at the same time would significantly increase the chance of another recession.
"2012 is shaping up to be a tough year because the super committee decided to punt," economist Mark Zandi said Sunday after a parade of dejected super committee members gave mopey interviews on the Sunday talk shows.
Workers earning less than $106,000 a year would see their payroll taxes rise by nearly 50 percent, depressing the size of paychecks and cutting back on consumers' capacity to spend. The liberal Center on Budget and Policy Priorities has estimated the payroll tax cut put an extra $120 billion in workers' pockets this year.
"We need to ensure that that is in place for next year because Americans are struggling and they deserve this tax break and we certainly would be shocked if Congress did not go along," Carney said.
Meanwhile, when the alternative minimum tax was initially implemented it wasn't indexed to inflation. While its original intent was to hit wealthy taxpayers who were gaming the tax code, over the years has ensnared a greater and greater section of the middle class. Each year, Congress passes an "AMT patch" that punts the problem to the next year. This year's patch was passed as a part of the deal that extended the Bush tax cuts for two years -- but like the payroll tax cut, it was only extended for one year. Extending the AMT patch would save taxpayers more than $85 billion in 2012, according to the nonpartisan Tax Policy Center.
And doctors who treat Medicare patients will see their pay drop 27 percent if Congress doesn't step in. Periodically, it passes what's known as a "doc fix" to prevent Medicare compensation from falling in line with a 1990s law. Doctors lobby hard for the fix and Congress often goes down to the wire, with health care providers warning that Medicare patients will be cut off if it isn't passed.