Congress returned from its Thanksgiving recess the week of Nov. 26 to begin finalizing a number of year-end legislative issues. At the top of the list, it must find a solution to the “fiscal cliff”: a combination of sizable tax increases and spending cuts, set to automatically take effect at the beginning of the new year. Some analysts believe that the combination of tax increases and spending cuts could send the economy into another recession.
Democrats and Republicans in both the House and Senate remain at odds over exactly how to fix this issue, which could require action on expiring tax laws, existing taxes, and discretionary domestic and defense spending.
The two major pieces of the puzzle under consideration are the 2011 Budget Control Act’s sequestration plan, which begins Jan. 2, 2013, and triggers automatic cuts to discretionary programs, and the expiration of the Bush-era tax cuts on Dec. 31, 2012. While the Highway Trust Fund (HTF) programs would not be subject to sequestration, programs funded by the General Fund, such as New Starts, would face automatic cuts.
In addition to sequestration and the expiring Bush tax cuts, a number of important but lesser discussed items may play a part in any year-end deal. These include the Medicare “Doc Fix,” the payroll tax holiday, the Alternative Minimum Tax, the farm bill, the debt ceiling limitation, and any number of tax incentives not covered under the traditional extenders legislation, such as the Earned Income Tax Credit, child credit, and American Opportunity tax credit, among others.
The final major puzzle piece would be tax extenders legislation: a package of tax credits that for years have been bundled and renewed en masse. The Senate, but not the House, has pending tax extenders legislation before it; this bill includes the Commuter Tax Benefit and the Alternative Fuel Tax Credit, both important issues to commuters and the public transit industry alike.
All these items could be used to produce a revenue and spending balance acceptable to both parties and would, at least in the short term, prevent the country from falling off the metaphorical cliff.
Whether Congress makes one or two small changes, such as simply pushing sequestration back to later in 2013, or a series of smaller revenue and spending tweaks, or attempts to seek agreement on a “grand bargain” that encompasses many of the legislative issues, remains to be seen. Resolution of these issues is the primary focus for leadership in both the House and Senate, as well as for the Obama Administration, and efforts to reach a compromise are ongoing. Given the number of issues present, it may be weeks before a package is finalized.
FTA Schedules Webcast on MAP-21
FTA has scheduled a live public webcast, “Overview of MAP-21 Apportionment Notice and Guidance: What Does It Mean?” for Dec. 4, 1:30-3 p.m. EST. No RSVP is necessary. Interested persons can view the live webcast by logging in.
Topics will include an overview of MAP-21; an outline of the Fiscal Year 2013 Apportionment Notice; key provisions and interim guidance; FY 2013 apportionment tables; and next steps—future implementation.
For more information, click here.
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