Congress must act on economy



For many, there is little concern about the current “do-nothing” Congress; they figure at least it’s not doing harm. But there is another way to look at the inability of this Congress to do anything of consequence.

By not taking action on issues that bear heavily on Americans’ financial problems, Congress is making life much harder on all of us. And it could get worse. Much worse.

While Congress votes on matters of little consequence, votes on five critical issues have not been scheduled and might not occur until late in the year, if at all in 2012.

By January, extended unemployment benefits will end, affecting thousands who lost their jobs and still aren’t working. It is estimated that the loss of extended benefits will result in $40 billion less in consumer spending a year. Democrats want benefits extended; Republicans say the country can’t afford it.

To spur the economy, Congress cut Social Security payroll taxes by two percentage points to 4 percent in 2011 and 2012. Without action, the payroll tax will rise to 6 percent in 2013, resulting in $125 billion less in disposable income for everyone who pays FICA taxes.

At the end of the year, the tax cuts President George W. Bush pushed through Congress will expire. If they are not extended and if Congress fails to address the problem of the alternative minimum tax suddenly affecting thousands of middle-income families, household spending is expected to fall by $280 billion in 2013. For the average family, that translates to a tax increase of $1,750 a year.

At the end of 2012, the 2011 Budget Control Act means $110 billion will be cut automatically from federal spending. Half will come from the military. Programs Americans want, from food safety to national parks, also will take huge cuts. The automatic cuts were not expected to take effect because a congressional “supercommittee” was supposed to agree on a 10-year, $1.2 trillion deficit-reduction package. But the supercommittee failed to act.

And, of course, there is the perennial fight over raising the debt ceiling, once automatic and noncontroversial, but now a blood sport. That vote might happen in early January.

The Congressional Budget Office says uncertainty caused by Europe’s problems and Congress’ failure to take action to avoid the “fiscal cliff” at year’s end could reduce gross domestic product growth by as much as 0.5 percent this year alone.

For the past six months, many investors assumed that Congress would avoid the cliff and compromise. But the presidential, House and Senate campaigns have prevented every attempt at ending the stalemate over how to reduce federal spending without seriously jeopardizing the economy’s health.

Not a reassuring scenario.

Ann McFeatters writes for Scripps Howard News Service. Email her at