When the super committee announced its failure to reach an agreement on Monday, it jump-started what is sure to be a nasty fight over billions of dollars in legislative business that was left on the back burner during the panel's secret deliberations.
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Lawmakers now will rush to negotiate patches for quickly expiring provisions and programs—everything from the annual fix for the alternative minimum tax to jobless benefits and payroll tax relief--normal work that committees were forced to put on hold pending the special committee's action.
House aides confirmed on Monday that lawmakers will have to address billions of dollars in expiring tax provisions before the end of the year. Many of the programs received a one-year extension as a part of last year’s $875 billion package that renewed the Bush-era tax cuts through 2012.
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That leaves lawmakers gearing up to re-litigate much of the same spending fight that kept Congress in session last year until Christmas. This time, however, Democrats must negotiate without the benefit of the Bush tax-cut expiration as leverage, and without control of the House calendar.
The most pressing issues for Congress when it returns to Washington next week will be stalling the expiration of significant and costly tax provisions, including the alternative minimum tax, payroll-tax relief, energy tax credits, advanced credits for depreciation on capital investments, and a package of 40 or more general tax extenders. Last year, the Joint Committee on Taxation estimated that the AMT would cost $85 billion, the payroll holiday was scored at just over $100 billion, and the miscellaneous tax extenders were assigned a cost of $83 billion.
And that doesn't include the non-tax programs that Congress will try to tackle--the perennial Medicare pay problem, known as the “doc fix,” and the expiration of federal emergency unemployment benefits.
"The most difficult issues, in terms of cost, are the payroll tax and the AMT,” said Harry Gutman, a tax expert at KPMG financial services and a former chief of staff at the Joint Committee on Taxation. “When payroll-tax relief was done last year, it was scored at over $100 billion for the period of time it was in effect. The AMT is roughly $80 billion, and the other tax extenders are about $40 billion."
One unemployment insurance package offered by Rep. Lloyd Doggett, D-Texas, would cost nearly $50 billion to continue providing benefits for about 6 million people.
With doc fix, doctors within Medicare are up for a nearly 30 percent pay decrease in 2012 if Congress does not put off a cut under the program’s sustainable growth rate formula. Another one-year delay to the pay cut is estimated to cost more than $22 billion.
Some Democrats on the House Ways and Means Committee had hoped that the super committee's fast-track protections would help avoid a spending showdown by bundling the costly programs into the bigger deficit package. Without benefit of the Bush tax cuts as a negotiating tool, Democrats will struggle to win GOP support on pricey program extensions.
But the last-minute push will pose a political challenge for Republicans too, as allowing employer-involved programs, such as the payroll deduction, unemployment insurance, and bonus depreciation, to expire could draw criticism from business.
Negotiations on all of these programs will be further complicated by a weak economy and a holiday season that will see lawmakers in their districts, campaigning for the 2012 elections.
Congress could choose to extend programs without paying for them, delaying the pain, but that option is likely to be a nonstarter for the GOP in both chambers. Another option would be for lawmakers to take the whole bundle and create a big, expensive bill when they return on November 28, leaving just 19 business days to spend billions before Christmas.