Expiration of the Bush Tax Cuts is Inevitable

Congressional leadership announced a tentative deal today to fund the federal government through March of next year at levels previously agreed to in the Budget Control Act (the debt ceiling deal).

(Reuters) – Democrats and Republicans in Congress have reached a deal to fund federal government activities through next March and eliminate any threat of agency shut downs that could upset voters ahead of the November 6 presidential and congressional elections, legislative aides said on Tuesday.

The deal, which policymakers were expected to announce later on Tuesday, would fund discretionary federal programs – from defense and foreign aid to education, transportation and medical research – at levels specified in last year’s debt limit deal, or about at an annual rate of $1.047 trillion.

What this really means is it’s now all but guaranteed the Bush Tax Cuts will expire at the end of this year.

The Republicans are signing away the only leverage they could have used to force the issue, and if congress simply does nothing they will expire.

I won’t say it’s impossible they could be extended, but unless you can envision a scenario wherein the House Republicans agree to extend tax cuts for only the first $250,000 of income, it isn’t happening.

This deal, announced today by John Boehner and Harry Reid, also means sequestration will continue as planned.

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  • http://drangedinaz.wordpress.com/ IrishGrrrl

    Ugh, the change in the Earned Income Credit will hit me really, really hard.

    • desertflower1

      Not to worry…it won’t last long. We need to take the House and keep the Senate. Chin up…

    • JMAshby

      Unless I’m mistaken, you have until 2014. The expiration will not apply to this year’s taxes.

      Personally I expect the very first priority of the next congress will be to pass new economic stimulus including new lower income tax breaks. There will be a short period of time, maybe a month or three, where this could be possible.

      That is unless the Rs take the Senate. Then all bets are off.

      • SlapFat

        To comment on a different portion of your remark if you go delve through Nate Silver’s past articles over at fivethirtyeight.com you’ll find that the odds of the GOP taking over the Senate are pretty low. They’re a favorite to maintain the other chamber, which sucks, but with Biden as the tie-breaker in the Senate the odds of the entire congressional body going Total Nutjob isn’t highly likely.

        Add that to the scenario of President Obama gaining a second term and we’ll have an obstruction-laced carnival of possibilities for the next four years. We do this to ourselves, by the way. Non-voters and voters alike, we do this to ourselves.