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The Budget Control Act of 2011
By Children’s Home Society of Florida Foundation
Speaking in Chicago last week, Senate Whip Richard Durbin (D-IL) proposed a change in the plan to reduce spending starting January 1, 2013. Under the Budget Control Act of 2011, substantial spending cuts in both defense and Medicare providers will commence on that date. These cuts together with potential tax increases have been described as a “fiscal cliff” that could send the nation back into recession.
Spending Cuts
The spending cuts are required because the Joint Congressional Committee in 2011 was unable to agree on a budget and tax plan. The anticipated spending cuts are designed to reduce costs by $1.2 trillion over the next decade.
Sen. Durbin proposes delaying the spending cuts for a term of six months. The Budget Control Act would be modified to allow the Senate Finance Committee and the House Ways and Means Committee an opportunity to develop a new plan.
Under Durbin’s proposal, the two committees must submit bills by June of 2013. The plans must total $4 trillion in budget savings. There would be $1.33 trillion in increased taxes and $2.67 trillion in budget reductions.
Assessment
Following hearings by both committees, the bill would need to be submitted to a conference committee. After passage by both the House and the Senate, the $4 trillion plan could be signed by the President. If all of those steps were completed by June 30, 2013, the mandatory budget cuts would not take place. They would be replaced by the agreements for tax increases and budget cuts in the new law.
Editor’s Note: The mandatory budget reductions in defense and Medicare take effect in 2013 because the Joint Congressional Committee was unable to agree on the balance of tax increases and budget reductions. There will be an opportunity for enacting new tax and budget provisions in the November session following the elections. Because the time is quite short for writing major legislation, many Senators and Representatives would like to defer action to 2013. However, there is a general reluctance to agree on the level of tax increases and budget reductions necessary for a compromise bill.
Conclusion
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Filed under: Health Law & Policy, Taxation | Tagged: Budget Control Act of 2011, Children's Home Society of Florida Foundation, Is There a Six Month Deferral for the Fiscal Cliff?, Richard Durbin | 4 Comments »
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