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Stepping Off The Edge Of (But Still On) The Fiscal Cliff


Senate reaches a temporary debt limit deal. Senate Democrats appear to have accepted a proposal from Minority Leader Mitch McConnell that would allow the federal government to continue borrowing money into December. As usual, details still need to get resolved. But Republicans will no longer block a Democrats-only vote—for now. The agreement sets up likely battles over a big social spending bill and a longer extension of government borrowing authority in two months. Democrats still insist they won’t roll a debt increase into a big budget reconciliation bill. Republicans say they must. 

Just in time. The Bipartisan Policy Center has updated its projection, estimating the US would  miss debt payments as soon as October 19 without a borrowing extension, roughly the same date as Treasury predicted. 

How will Biden scale back the reconciliation bill? Numerous reports say White House aides are divided over how to make inevitable cuts in the massive social spending bill Congress will consider through budget reconciliation. Some want to focus on a handful of top priorities. Others want to spend modest amounts on lots of programs.  

One in three Americans want the expanded child tax credit to be permanent. The Politico/Morning Consult Poll found that half of those surveyed support the expanded child credit by only 35 percent want it made permanent. The credit of as much as $300 per child per month is available to most families with children but only for a year.  

IRS taxpayer service problem continue. At a recent IRS meeting for stakeholders, participants learned that  IRS service is at historic lows. The IRS is getting more calls than ever, in part because of questions about the expanded Child Tax Credit. But it has too few staff to handle them. And the agency still is working its way through last April’s returns.  

The carbon tax is not the solution to global climate change. TPC’s Eric Toder lists the problems:  Politics (voters consistently reject it), borderless-ness (what good is a US tax on domestic carbon emissions if pollution is untaxed elsewhere… and floats through the air?), and porousness (a carbon tax on US based emissions can be avoided by importing high-carbon content from other countries). Eric concludes the solution is development and deployment of new clean energy technology.

How can we make retirement saving easier for millions of Americans? TPC’s Tax Hound proposes ways  for more Americans to save for retirement. She backs two ideas under consideration in the current budget reconciliation bill: an improved Saver’s Credit and a requirement that employers auto-enroll their employees in retirement savings plans.  

 

For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at dailydeduction@taxpolicycenter.org.



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