President Barack Obama, Vice President Joe Biden, Speaker of the House John Boehner (R-OH), House Minority Leader Nancy Pelosi (D-CA), Senate Majority Leader Harry Reid (D-NV) and Senate Minority Leader Mitch McConnell (R-KY) will meet today at 3:00 p.m. at the White House to discuss the (lack of a) budget.
Call me cynical (I prefer to think of it as realistic) but I think it’s a pretty safe bet that 5:00 p.m. will come and go without a firm deal. It’s not coincidental that they’re meeting this close to the end of the year. And it’s not coincidental that they’re meeting at the end of business on a Friday. In fact, it plays directly to political strategy this year which was been delay, blame, delay, blame, rinse, and repeat.
If you’ve been lost in a whir of holiday festivities, let me catch you up to speed:
- Without any movement from Congress, tax rates will go up for nearly everyone. Arguably, this is what both sides want to happen because Republicans can point fingers at Democrats for raising taxes and Democrats can point fingers at Republicans for being obstructionist for the sake of wealthy taxpayers. Win, win for everyone – you know, except for taxpayers.
- Cuts to services and programs, including the military, will be automatic. The sequestration cuts will kick in on January 1 (yes, that’s next Tuesday) if nothing happens. This is a great panic button for Congress. It puts everyone into a dither (We’ll be invaded! Our seniors will starve!) and will allow Congress to quickly push through spending deals just like always after the panic sets in – but before everyone realizes that the limits are actually not real but are self-imposed by Congress.
- There will be a shoving match in the House. Okay, it won’t be actually “Fight Night” quality but it’s happening. It is clear that the latest deal-making in the House has been a test for Republican leadership. It’s no secret that House Majority Leader Rep. Eric Cantor (R-VA) has been elbowing for position at the top – and he is viewed by many as the reason for the derailment of Boehner’s Plan B. Perhaps he had his own Plan C (Cantor for Speaker of the House?). Cantor will be conspicuously absent at the budget talks today.
So where does any of this leave us?
Right now, nowhere.
After the House failed to take action last week, Boehner said that it was all up to the Senate. But that’s not going to happen: the Senate Democrats aren’t in a hurry to do anything. As if that wasn’t obvious enough, Reid confirmed this by saying, “I don’t know, time-wise, how it can happen now.”
Reid, in contrast, asked Boehner to have the House vote on a measure passed by the Senate to extend tax cuts for all but the taxpayers at the top. That isn’t likely to happen.
In the midst of all of the squabbling, ordinary taxpayers are worried about falling back into a recession. Yesterday, the Consumer Confidence Index dipped in response to the notion that a deal would not be forthcoming. The Index now stands at 65.1 (1985=100), down from 71.5 in November.
The IRS anticipates that all of this foot-dragging will delay tax filings for 2013. E-filing for taxes are slated to begin on January 22, 2013. But as Congress still fights over 2013, they haven’t fixed everything for 2012: the AMT hasn’t been patched yet for LAST year. As in the year that’s ending in three days.
Also ending in three days? The money. According to Treasury Secretary Geithner, we reach our debt limit on Monday.
It all sounds very dire. And a lot of the predictions about the end of the world are as authentic as those offered by the Mayans. But what is true is that a failure to act will cause complications for taxpayers – not just for those additional 30 million subject to AMT this year without a patch, but those that make estimated payments and those who want to buy houses, have kids, go back to school, hire employees and start new jobs… Unlike Congress, taxpayers tend to like and respect deadlines. And we like to plan. Perhaps if Congress lived for a little bit in the real world, they’d get that.
