As the March 1 deadline approaches, lawmakers are still attempting to find common ground on necessary budget cuts to avoid an across-the-board sequestration. House Speaker John Boehner, R-Ohio, ignored calls to end the House’s week-long recess to work on averting the $85 billion in budget cuts, while Sen. Charles E. Schumer, D-N.Y., was confident that his party’s plan to avoid sequester would garner Republican support and prevent drastic spending cuts in defense and federal programs. A new bipartisan plan was unveiled by the former co-chairs of President Obama’s Bipartisan National Commission on Fiscal Responsibility and Reform, that would reduce the federal debt by $2.4 trillion over 10 years. The IRS, meanwhile, released revised tables for the March 2013 applicable federal rates (AFRs), as well as FAQs addressing merchant cards.
Boehner ignored calls from House Democrats to recall Congress from its week-long recess in order to return to Washington and work on averting the $85 billion in budget cuts scheduled for March 1. In a February 20 conference call with reporters, Rep. Bobby Scott, D-Va., said lawmakers will have a difficult time replacing the sequestration cuts during the week of February 25, when Congress returns.
Schumer, the Senate’s third-highest-ranking Democrat, on February 17 expressed confidence that his party’s plan to avoid sequester would eventually garner Republican support and prevent drastic spending cuts in defense and federal programs. Speaking on CNN’s “State of the Union,” Schumer said devastating cuts proposed by the GOP would lead to 750,000 job loses and cause the economy to shrink by 6 percent. He noted that the Democrats’ plan to close loopholes for the oil and gas industries and for those who receive tax breaks by shipping jobs overseas have broad public support and will force the GOP to abandon their insistence on no new taxes. Rep. Martha Roby, R-Ala., in the weekly Republican address, accused President Obama and Senate Democrats of viewing the sequester as an opportunity to push through another tax increase.
Erskine Bowles and Alan Simpson, former co-chairs of President Obama’s Bipartisan National Commission on Fiscal Responsibility and Reform, on February 19 unveiled a new bipartisan plan that would reduce the federal debt by $2.4 trillion over 10 years. One section of the four-step plan calls for comprehensive, pro-growth tax reform in place by December 2013, which would eliminate or scale back most tax expenditures, with a portion of savings from tax expenditures dedicated to deficit reduction and the additional savings used to reduce rates and simplify the tax code.
Treasury Secretary Nominee Jack Lew, in a written letter released on February 20, told Senate Finance Committee member Charles E. Grassley, R-Iowa, that he believes there is common ground between the Obama Administration and Republican lawmakers on reducing incentives that encourage the shifting of investment and income overseas. Lew’s response stemmed from questions asked by Grassley during his nomination hearing before the committee on February 13. Lew said the President’s framework for corporate tax reform supports a hybrid approach, including a territorial tax system that reduces incentives for shifts to low-tax countries, and puts the United States on a more level playing field with international competitors. Lew also promised, if confirmed, to look into problems caused by new procedures put in place by the IRS to claim the biodiesel credit for the first three quarters of 2012 that may pose a barrier to partnerships, joint ventures, and co-ops retroactively claiming the credit.