As expected, the Joint Select Committee on Deficit Reduction announced that they would not reach an agreement by the November 23 deadline. Attention is beginning to shift to potential attempts to roll back some of the $1.2 trillion in automatic spending cuts (sequestration) scheduled to begin in 2013. The President has called on legislators to get back to work on crafting a deal and has said he will “veto any effort” to reduce the cuts that does not provide an equal amount of deficit reduction.
The Obama Administration has signaled that it will focus significant energy over the coming month on initiatives to extend the payroll tax holiday and promote jobs measures. The Senate is expected to try to tie such measures to tax increases targeted on higher income Americans, which could increase the risk that harmful estate tax-related revenue raisers could be explored. However, at this point it is more likely that income tax provisions will be the primary focus. Policy and Taxation Group will keep you posted as the new dynamic sets in on Capitol Hill.