Tomorrow is election day – finally! Regardless of who wins the presidency, he will have to move quickly to find a solution to avert the fiscal cliff that can muster enough votes in a politically divided Congress. As I’ve been reporting for much of the year, Congress must take action by the end of the calendar year in order to avoid a tax increase of more than $500 billion on nearly 90 percent of Americans. Unemployment assistance for millions of jobless Americans also would lapse, and physicians treating Medicare patients would see their reimbursement payments cut. But the most crucial element of the fiscal cliff comes in the more than $100 billion in automatic, across-the-board spending cuts – or the sequester – that is set to take place on January 2, 2013 and would cut spending equally between domestic and defense programs. Lawmakers in both parties oppose letting sequestration take effect — particularly because of the consequences to the Pentagon — but to date there has been no consensus on how to avert it.
Also looming is the likelihood that the White House will have to ask Congress to raise the debt ceiling again sometime in the first three months of 2013, potentially reigniting the partisan battle that nearly led to a government shutdown in 2011. The Treasury Department reiterated last week that the government will hit its current debt limit before the end of the year but has the ability to postpone potential default until early next year. Many hope to deal with this issue during the lame duck session rather than leaving it to the next Congress.
The results of tomorrow’s election will likely determine the eventual outcome of the lame duck session – what issues are tacked and what gets punted to the next Congress. The Office of Federal Relations will closely monitor and continue to report on the elections outcome and lame duck session.