When lawmakers return to Capitol Hill after their Thanksgiving break, they will have barely a month to decide whether to raise taxes.
Republicans, coming off their November landslide, are generally optimistic that Congress will vote by year end to extend the Bush tax cuts, at least temporarily.
But the lame-duck session will remain under Democratic control, so anything could happen.
"It's stunning to think people would let (the tax cuts) lapse. But that's exactly what is going on," says Phil English, a former Pennsylvania congressman and senior government relations adviser for the Arent Fox law firm in Washington, D.C.
"There's a great deal of brinksmanship, and serious Senate negotiations are being undercut by (House Speaker) Nancy Pelosi's attempt to force a vote in another week on (President Barack) Obama's policy of only selective extensions for people earning under $250,000.
"The old regime is still calling the shots," English cautioned.
Earlier this month, Obama sought to reassure Pelosi and Senate Majority Leader Harry Reid that he wanted a permanent extension of the Bush tax cuts only for the middle class.
Tony Fratto, managing partner with Hamilton Place Strategies in Washington, D.C., remains optimistic, predicting across-the-board passage of a temporary extension of perhaps two years.
"All of them will pass, and that's the best outcome for Republicans. It's a fight we're happy to have in 2012," he said.
Faced with the prospect of a big stock market sell-off if Congress fails to act, lawmakers of both parties will seek to calm business by maintaining the status quo, Fratto believes.
"From Adam Smith to Milton Friedman to Maynard Keynes, no economist says to raise taxes in a bad economy," he said.
Nonetheless, Democrats continue to float proposals that could gum up the works.
Last week, Senate Finance Committee Chairman Max Baucus, D-Mont., announced he would introduce a package to cut at least $60 billion in taxes and extend breaks for an array of individuals and businesses.
The targeted provisions include a $4 billion tax break for Goldman Sachs and other Wall Street firms doing business overseas.
By mixing some -- but not all -- extended tax cuts with new spiffs for special interests, Democrats appear to be looking for ways to reclaim the tax debate. But Fratto discounted Baucus' chances.
"It's a sideshow," he sniffs.
The main event -- an across-the-board extension of the Bush cuts valued at some $4 trillion -- is viewed as crucial by conservatives. And not just by wealthy right-wingers making more than $250,000, the president's threshold for the "rich."
An analysis by Deloitte Tax LLC found that an individual with an income of $50,000 would see a tax increase of $1,100 if the tax cuts are not extended. A $50,000 family of four would see their taxes rise $2,900.
The numbers steadily rise for each income bracket. See chart and analysis HERE.
Assessing the stakes for Floridians, the conservative Heritage Foundation analyzed the economic impact of discontinuing the Bush tax cuts (read: raising taxes).
Between 2011-2020, Heritage estimated that Florida would:
- Lose, on average, 40,418 jobs annually.
- Lose, per household, $17,696 in total disposable personal income.
- See its residents' total individual income taxes increase by $33.3 billion.
If the lame-duck Congress fails to act by Dec. 31, the new 112th session, with a GOP House majority and a more closely divided Senate, could still alter the tax code retroactively.
"They can move dates back. But it's incredibly complicating for businesses and the IRS," Fratto said.
Doug Holtz-Eakin, president of the conservative American Action Forum, a Washington-based policy think tank, concluded: "If it's not by Jan. 1, withholding tables will show a tax increase and it will be too late to have an effect on holiday spending. The calendar says we need to do it fast."
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Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.
