With the Nov. 6 general election just a few weeks away, one thing is certain: Regardless of who wins, this Congress must address a long list of major issues before the new Congress convenes in January 2013. Consequently, incumbent members will need to meet one last time in a lame-duck session that will begin after the election and continue through December.
A lame-duck session is necessary to address year-end deadlines for such issues as Bush-era tax rates, which, if not extended, will default to higher rates. These would include marginal rates, capital gains and dividend rates, as well as the marriage penalty and child tax credit. In addition, the estate-tax formula with a $5 million exemption and maximum 35 percent rate will default back to a $1 million exemption with a top rate of 55 percent. If Congress fails to extend these rates, even temporarily, it could have a staggering effect on the economy and risk another recession.
This Congress also must renew the annual "patch" on the alternative minimum tax to spare millions of middle-class taxpayers from paying higher taxes, as well as the "doc fix" for payments to physicians who participate in Medicare and would otherwise sustain a 27 percent cut. In addition, the U.S.' debt limit might have to be raised again from its current $16.4 trillion ceiling so the federal government can continue selling bonds.
Congress also faces about 75 tax credits that either expired at the end of 2011 or will expire Dec. 31. All are typically considered in a tax extenders bill that some in the Senate would like to dispense with before Nov. 6.
On Aug. 2, the Senate Finance Committee passed a tax extenders bill, the Family and Business Tax Cut Certainty Act. The homeowner energy-efficiency tax credit (Internal Revenue Code Section 25C) was included and will be extended through 2013 (retroactive to Jan. 1, 2012). However, during the committee's consideration of the bill, it was not possible to fix the tax credit's flawed roofing language with product-neutral roofing criteria to make eligible all products that meet ENERGY STAR® requirements. Regardless, the House must draft its tax extenders package, and there is bipartisan sentiment on the Ways and Means Committee to fix the tax credit's roofing language if possible.
Funding for the federal government might not drag into the lame-duck session if an agreement between House and Senate leaders and the White House holds. On July 31, Senate Majority Leader Harry Reid (D-Nev.) and House Speaker John Boehner (R-Ohio) announced an agreement, supported by the Obama administration, on a six-month continuing resolution to fund the federal government from the beginning of fiscal year 2013 on Oct. 1, 2012, through March 2013. A continuing resolution simply extends the previous fiscal year's spending bills and removes funding policy for agencies from the committee process.
The continuing resolution will not address the Budget Control Act of 2011's sequestration provision that triggers automatic spending cuts Jan. 1, 2013. These cuts, which could total $1.2 trillion during 10 years, lean heavily on defense spending and could affect military construction. Ironically, the continuing resolution could give Congress more time in the lame-duck session to focus on the sequestration and adjust the cuts.
Additionally, the House Appropriations' Labor subcommittee approved a bill that included an amendment to prevent the Occupational Safety and Health Administration from spending funds on its new fall-protection enforcement directive as it applies to residential reroofing and roof system repair activities. And the Senate Appropriations Committee approved an amendment to its Department of Labor (DOL) bill to prevent DOL from spending funds on its H-2B temporary guest-worker visa wage and program rules. Both are currently suspended pending final court decisions and, if allowed to go into effect, will make the H-2B program unusable for roofing contractors.
At press time, Congress has not yet voted to pass the continuing resolution. However, it likely will be passed allowing more time during a post-election lame-duck session for this Congress to address unfinished tax and budget issues. If the continuing resolution has not been passed, one undoubtedly will be passed by the end of the year, and fall-protection and H-2B visa riders that are superseded can be revisited by the next Congress in 2013.
Craig Brightup is chief executive officer of The Brightup Group LLC, Washington, D.C.