Members of Congress are in Washington today trying to make last-minute deals to avoid supposedly dire consequences on January 1. So far it appears likely that some kind of one-year extension of current farm policies will pass in order to avoid a huge price spike for milk and problems for agricultural producers. UPDATE: A nine-month farm bill extension was added to the fiscal cliff bill.
Lots of plans are floating around to deal with the so-called “fiscal cliff”: Bush income tax cuts (last extended for two years in December 2010) are set to expire, along with lower payroll tax and estate tax rates. Meanwhile, various budget cuts are due to go into effect in January, including a “sequester” of federal spending on defense and other programs but also lower Medicare payments to doctors. At this point, I would be surprised if we don’t go over the cliff, and I agree with Senator Tom Harkin that no deal is better than a bad deal.
I will update this post throughout the day and evening with news on Congressional voting. After the jump I’ve enclosed some links on the latest proposals floating around the Capitol. Tremendous hypocrisy is on display. If deficit hawks believed their own propaganda, they would embrace higher taxes and lower spending to solve this supposedly dire threat to the U.S. economy. UPDATE: More news is below.
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