islative stalemate, with a heavy dose
of political posturing by both sides.
But even close elections can be clarify���
ing. A narrowly divided electorate
now having spoken, we expect discus���
sions to begin anew with some ur���
gency in the lame duck session.
Given major philosophical differences
on tax policy issues between the par���
ties, it remains to be seen whether
these discussions will lead to an
agreement to avert the fiscal cliff
while, at the same time, clearing the
way for comprehensive tax reform. In
our view, it is likely both will occur in
the lame duck session (or shortly
thereafter), beginning with agreement
on a Bush tax cut extension coupled
with a broad framework for a tax re���
form agreement, with the hard work
of tax reform to span across 2013. Al���
though there are a range of possible
outcomes in the lame duck session
and beyond, one thing is certain: in
www.rockproducts.com
stark contrast to the last year, over
the next few months we will finally
see the parties undertake a serious
discussion about tax policy.
reduction by seeking to compel the
113th Congress to reform entitlement
programs such as Medicare and Medi���
caid next year.
In the lame duck session, for example,
Congress might agree to legislation
that would extend all (or most) ex���
pired and expiring tax breaks for six
months to a year, tied to fundamental
tax reform generating some agreed���
upon amount in the hundreds of bil���
lions of dollars (or more) in overall
deficit reduction over the next decade,
with the threat of greater deficit re���
duction if the 113th Congress were to
fail to act by then. Democrats will
likely raise eliminating or modifying
some tax measures, including those
aimed at the oil and gas industry, to
help offset the cost of forestalling the
spending sequester or to make a
���down payment��� on future deficit re���
duction. Such an agreement also could
mandate some further level of deficit
Hard Decisions
Forcing hard decisions as a means of
achieving deficit reduction of course
is what the Budget Control Act of
2011 was supposed to accomplish by
establishing the ���Super Committee���
and creating the threat of sequestra���
tion next year if Congress failed to
agree to legislation reducing the
deficit by at least $1.2 trillion over a
decade. And it is precisely that failure
that has the nation confronting the
fiscal cliff. Many Senators and Repre���
sentatives recognize the irony that
the best way to prevent going over
the fiscal cliff this year is to cut a deal
that merely creates a bigger cliff that
would arrive in another six or 12
months. But doing so would at least
keep us at the precipice. E
ROCKproducts ��� DECEMBER 2012
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