Federal deficits, economic concerns dominate legislative agenda

Washington National Tax Services

Returning this week, Congress is expected to focus primarily on efforts to reduce federal deficits and promote economic growth. The first key step in the contentious debate over federal deficits will be the deliberations of the Joint Select Committee on Deficit Reduction ("the Deficit Committee"), the 12-member panel established by Congress under the Budget Control Act of 2011. The panel is charged with recommending by November 23 at least $1.2 trillion in deficit reduction, to be followed by an up-or-down vote by Congress before the end of the year.

The Deficit Committee -- sometimes referred to as the "super committee" because of its broad authority -- will have less than 13 weeks to agree on a plan that could include a mix of spending reductions, changes to federal entitlement programs, and revenue-raising provisions. If the Deficit Committee fails to approve legislation with sufficient deficit reductions, or Congress fails to pass such legislation, the Budget Control Act triggers $1.2 trillion in automatic spending cuts beginning in 2013.

Apart from deficit reduction efforts, the Obama Administration and Congress are expected to put forth various proposals to promote jobs. The Congressional Budget Office (CBO) recently revised growth projections for the U.S. economy downward for 2011 and 2012, to 2.4 percent and 2.6 percent, respectively. CBO expects the unemployment rate (now 9.1 percent) to remain high, falling slightly to 8.9 percent by the end of 2011 and 8.5 percent by the end of 2012.

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