Jewish World Review July 13, 2012 / 23 Tammuz, 5772
A do-nothing Congress exacts high costs
By Ann McFeatters
http://www.JewishWorldReview.com | For many, there is little concern about the current do-nothing Congress; they figure at least it's not doing harm. But there is another way to look at the inability of this Congress to do anything of consequence.
By not taking action on issues that bear heavily on Americans' financial problems, Congress is making life much harder on all of us. And it could get worse. Much worse.
Oh, there are votes, but they don't mean anything. For example, the GOP-controlled House has voted 33 times to repeal President Barack Obama's health care law; the Democratic-controlled Senate will not act. The House voted to hold Attorney General Eric Holder in contempt of Congress for refusing to turn over confidential documents on a controversial gun program Republicans said they need. The Senate has made clear it will not act, saying Holder testified nine times and gave Congress 7,600 pages of documents.
Meanwhile, votes on five critical issues have not been scheduled and will not occur until late in the year, if at all in 2012.
By January, extended unemployment benefits will end. That will affect thousands who lost their jobs and still aren't working. It is estimated that will result in $40 billion less consumer spending a year. Democrats want benefits extended; Republicans say the country can't afford it.
To spur the economy, Congress cut Social Security payroll taxes by two points, to 4 percent, in 2011 and 2012. Without action, the payroll tax will rise to 6 percent in 2013. That will result in $125 billion less in disposable income; everyone who pays FICA taxes will be affected.
At the end of the year, the tax cuts President George W. Bush pushed through Congress will expire. If they are not extended and if Congress fails to address the problem of the alternative minimum tax suddenly affecting thousands of middle-income families, household spending is expected to fall by $280 billion in 2013. For the average family, that translates to a tax increase of $1,750 a year.
At the end of 2012, the 2011 Budget Control Act means $110 billion will be cut automatically from federal spending, no matter whose ox is gored. Half will come from the military, a "disaster," according to Defense Secretary Leon Panetta. Programs Americans want, from food safety to national parks, will take huge, automatic cuts.
Automatic cuts were not expected to take effect because a congressional "supercommittee" was supposed to agree on a 10-year, $1.2 trillion deficit-reduction package. But the supercommittee failed to act.
And, of course, there is now the perennial fight over raising the debt ceiling, once automatic and non-controversial but now a blood sport. That vote might happen in early January.
With all that uncertainty and Europe's weak economy, investors are losing heart, further weakening the recovery that seemed promising earlier this year. The biggest impact is that businesses are not creating new jobs.
The Congressional Budget Office says uncertainty caused by Europe's problems and Congress' failure to take action to avoid the "fiscal cliff" at year's end could reduce gross domestic product growth by up to 0.5 percent this year alone.
For the past six months, many investors assumed that Congress would avoid the cliff and compromise. But the vitriol of the presidential campaign and campaigns for the House and Senate (all House seats and one-third of the Senate are at stake) has prevented every attempt at ending the stalemate over how to reduce federal spending without seriously jeopardizing the economy.
Republican leaders don't want to approve anything that might boost Obama's re-election chances. As Mitt Romney continues to out-raise Obama in monthly campaign contributions, Repubicans are more confident Romney could be elected in November. That victory and more Republicans in Congress could get them what they want early next year.
Democrats are adamant that incomes above $250,000 a year must generate more revenue. Republicans oppose all tax hikes. Tea partiers are determined to cut the deficit, no matter who is hurt.
Not a reassuring scenario.
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