AC in ‘12: Reveling in comeback or still slumping?
December 31st, 2011
Finance, Business, Economic
+%3Cp%3E+With+a+tax+cut+for+160+million+U.S.+workers+set+to+expire+in+less+than+two+weeks%2C+Republicans+and+Democrats+in+Congress+on+Monday+were+mired+in+a+last-ditch+battle+over+extending+it.%3C%2Fp%3E+%3Cp%3EIn+a+surprise+turnabout%2C+Republicans+in+the+House+of+Representatives+are+now+pushing+for+a+one-year+extension+of+the+payroll+tax+cut+and+have+rejected+a+short-term+compromise+struck+by+Republicans+and+Democrats+in+the+Senate+during+the+weekend.%3C%2Fp%3E+%3Cp%3EHouse+Republicans+initially+opposed+renewing+the+tax+break%2C+which+expires+on+December+31%2C+after+expressing+skepticism+that+it+would+boost+the+economy+as+the+White+House+claimed.%3C%2Fp%3E+%3Cp%3EHouse+Speaker+John+Boehner%2C+the+top+Republican+in+Congress%2C+said+his+chamber+would+vote+on+Monday+and+likely+reject+the+Senate+bill+passed+on+Saturday%2C+despite+it+having+the+blessing+of+Senate+Republican+leader+Mitch+McConnell.%3C%2Fp%3E+%3Cp%3EInstead%2C+Boehner+said+he+wanted+to+begin+negotiations+with+the+Senate+on+renewing+the+2011+tax+cut.+It+was+not+clear+how+Boehner+would+resolve+the+thorny+issue+of+offsetting+the+%24120+billion+in+lost+revenues+from+a+full-year+extension+of+the+tax+cut+that+he+is+now+demanding.%3C%2Fp%3E+%3Cp%3EA+failure+by+Senate+negotiators+last+week+on+that+point+led+them+to+come+up+with+just+a+two-month+tax+cut+renewal.%3C%2Fp%3E+%3Cp%3EThe+two+political+parties+have+been+arguing+for+weeks+over+the+payroll+tax+that+is+scheduled+to+rise+to+6.2+percent+on+January+1%2C+from+the+current+4.2+percent%2C+if+Congress+cannot+pass+an+extension.%3C%2Fp%3E+%3Cp%3EBut+there+have+also+been+deep+disagreements+among+Republicans%2C+especially+in+the+House%2C+over+the+tax+legislation+that+has+also+become+a+vehicle+for+extending+unemployment+benefits+for+millions+of+Americans.%3C%2Fp%3E+%3Cp%3ESenate+Democrats+have+bridled+at+the+idea+of+new+negotiations+on+the+payroll+tax+cut.+They+also+accused+House+Republican+leaders+of+authorizing+McConnell+to+negotiate+a+deal+that+ultimately+produced+the+two-month+cut+extension%2C+only+to+turn+their+backs+on+it+once+the+Senate+approved+it.%3C%2Fp%3E+%3Cp%3E%22I+will+not+re-open+negotiations+until+the+House+follows+through+and+passes+this+agreement+that+was+negotiated+by+Republican+leaders%22+and+overwhelmingly+passed+by+the+Senate+on+Saturday%2C+said+Senate+Majority+Leader+Harry+Reid%2C+a+Democrat.%3C%2Fp%3E+%3Cp%3ESENATOR+BLASTS+FELLOW+REPUBLICANS%3C%2Fp%3E+%3Cp%3EEven+some+Senate+Republicans+were+attacking+House+colleagues+for+opposing+the+two-month+extension.%3C%2Fp%3E+%3Cp%3E%22The+House+Republicans%27+plan+to+scuttle+the+deal+to+help+middle-class+families+is+irresponsible+and+wrong%2C%22+said+Republican+Senator+Scott+Brown.%3C%2Fp%3E+%3Cp%3EThe+end-of-year+fight+caps+a+tumultuous+year+and+will+deepen+the+sense+of+dysfunction+in+Washington.+This+latest+battle+caught+even+cynical+Capitol+Hill+watchers+by+surprise.%3C%2Fp%3E+%3Cp%3ECredit+rating+agencies+are+already+skeptical+that+Washington%27s+politicians+have+the+political+will+to+steer+the+country+through+global+economic+instability.+Americans+heading+to+the+polls+in+2012+have+also+lost+confidence+in+Congress%2C+according+to+opinion+polls.%3C%2Fp%3E+%3Cp%3EFor+much+of+2011%2C+Republican+and+Democrats+sparred+over+spending%2C+debt+levels+and+taxes%2C+bringing+the+government+to+the+brink+of+shutdown+and+costing+the+United+States+its+prized+AAA+credit+rating+from+Standard+%26+Poor%27s+rating+agency.%3C%2Fp%3E+%3Cp%3ENow%2C+some+economists+are+predicting+even+worse+times+ahead+if+Congress+fails+to+renew+the+payroll+tax+cut.%3C%2Fp%3E+%3Cp%3EMark+Zandi%2C+chief+economist+at+Moody%27s+Analytics%2C+speaking+to+Reuters+Insider%2C+bluntly+warned%3A+%22I+do+think+recession+odds+will+rise+quite+significantly+early+next+year+if+it+is+not+extended.%22%3C%2Fp%3E+%3Cp%3EZandi+said+most+of+the+impact+would+be+felt+in+the+first+half+of+2012%2C+at+a+time+when+the+U.S.+economy+is+most+exposed+to+risks+from+a+debt-riddled+Europe+and+a+continuing+U.S.+housing+foreclosure+crisis.%3C%2Fp%3E+%3Cp%3EFurther+complicating+matters+is+that+when+the+Senate+on+Saturday+passed+its+two-month+tax+cut+extension%2C+along+with+a+%24915+billion+bill+to+keep+government+operating+through+September%2C+it+concluded+its+legislative+session+until+January+23.%3C%2Fp%3E+%3Cp%3ENow%2C+with+Democrats+and+Republicans+on+Capitol+Hill+accusing+each+other+of+causing+the+standoff%2C+it+was+not+clear+how+the+tax+fight+will+be+resolved+-+or+whether+it+will+be.%3C%2Fp%3E+%3Cp%3EIf+the+House+formally+requests+negotiations+with+the+Senate%2C+Reid+will+have+to+decide+whether+to+reverse+course+and+bring+senators+back+to+do+more+legislating.%3C%2Fp%3E+%3Cp%3EThere+are+three+other+options%3A+Boehner+could+try+to+ram+the+Senate-passed+bill+through+House+and+hope+that+enough+Republicans+and+Democrats+join+forces+for+passage.+But+it+seems+he+has+already+closed+that+option+by+saying+the+two-month+extension+was+too+flawed.%3C%2Fp%3E+%3Cp%3EAlternatively%2C+the+House+could+pass+a+new+version+of+the+legislation+and+hope+that+the+Senate+quickly+accepts+it.%3C%2Fp%3E+%3Cp%3EFinally%2C+there+is+the+option+of+giving+up+and+letting+the+payroll+tax+revert+to+its+pre-2011+6.2+percent+for+workers%2C+at+least+until+early+next+year+when+Congress+starts+its+2012+session.%3C%2Fp%3E++%3Cp%3E%3Ca+href%3D%27http%3A%2F%2Fwww.reuters.com%2Fassets%2Fprint%3Faid%3DUSTRE7B827K20111219%27+rel%3D%27nofollow%27%3ERead+more%3C%2Fa%3E%3C%2Fp%3E+
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Record drought ravaged parts of Texas and Oklahoma this year, but Missouri was hard hit, too
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