Daily Tax Update - November 27, 2012: Congress Convenes Lame-Duck Session

CONGRESS CONVENES LAME-DUCK SESSION:  Today, Congress returned from its post-election break and hopes to strike a deal to avert the looming "fiscal cliff."  If Congress does nothing, all taxpayers will face higher bills next year.  This week, President Obama is holding a series of public outreach events aimed at building support for his approach.  The President wants to allow tax increases on the wealthy while extending tax cuts for families earning $250,000 or less.

  • Senate Minority Leader Mitch McConnell criticized the President’s "campaign style" approach stating that "rather than sitting down with lawmakers of both parties and working out an agreement, he's back out on the campaign trail, presumably with the same old talking points we're all familiar with.  If the president wants a solution to the challenges of the moment, the people he needs to be talking to are the members of his own party, so he can convince them of the need to act."
  • Today, Senate Majority Leader Harry Reid said, "There’s been little progress with the Republicans, which is a disappointment to me.  They talked some happy talk about doing revenues, but we only have a couple weeks to get something done."  Reid added, "So we have to get away from the happy talk and start talking about specific things."  However, Reid also said he was "extremely hopeful, and I do not believe that the Republicans are going to allow us to go over the cliff."
  • Yesterday, McConnell said talks "remain at an impasse."  McConnell urged President Obama to submit a plan "that has a realistic chance of passing the Congress."  McConnell added, "It’s time for the president to present a plan that rises above these reckless and radical voices on the hard left, that goes beyond the talking points of the campaign trail and that has a realistic chance of passing the Congress."
  • White House press secretary Jay Carney said yesterday that the next meeting with congressional leaders would come "at the appropriate time."  Carney also said that Obama had a phone conversation with House Speaker John Boehner and Senate Majority Leader Harry Reid over the weekend.  Carney added, "I would say also that the President has made clear that he will not sign a bill that extends the Bush-era tax cuts for those making more than $250,000.  He has made that clear.  I’ve made that clear.  Others have made it clear.  And that is a firm position.  And the reason for that is very practical -- because you can't -- math tells us that you can't get the kind of balanced approach that you need without having rates be part of the equation.  It simply -- we haven't seen a proposal that achieves that -- a realistic proposal that achieves that.  But the President has made clear also that he understands that compromise has to be part of this."  Carney continued, "So it's a pragmatic, practical approach.  And the reality is closing loopholes and ending deductions as an alternative to raising rates on the top earners, top 2%, those making over $250,000, sounds good, but you have to look at the actual contents of the proposals.  Because the President has made clear in his budget that he is for some of the very things that we're talking about here.  He has put forward a cap on deductions at 28%.  And he has talked explicitly about wanting to reform our tax code.  But you need to do both, and you need to do it in order to achieve the kind of balance that is essential to setting us on a sustainable path, fiscally."  Carney added, "I think we remain confident that we can achieve an agreement.  Work has to be done.  Work is continuing to take place."
  • On Monday, the White House released a report from the National Economic Council and the Council of Economic Advisers called The Middle-Class Tax Cuts’ Impact on Consumer Spending and Retailers.  According to the report, "The typical middle-class family with two children would face about a $2,200 tax increase if the tax cuts are not extended for the middle class."

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