Decisions the super committee delayed
Joint Select Committee on Deficit Reduction Co-Chair Patty Murray (D-WA) talks with fellow super committee member Sen. Max Baucus (D-MT) before a signing ceremony for a law that will provide business tax credits to help put veterans back to work November 21, 2011 in Washington, DC.
Steve Chiotakis: The failure of the super committee to come up with a budget deficit compromise is going to have some lasting consequences. That's because the panel had the ability to fast track some decisions in the Congress on things like taxes and
Marketplace's John Dimsdale is with us now from our Washington bureau with the latest on what those consequences mean for you and me. Good morning John.
John Dimsdale: Morning Steve.
Chiotakis: So, putting aside the debt failure, what else did the super committee put off?
Dimsdale: For example, all our paychecks got a boost this year from a 2 percent cut in the Social Security payroll tax, and that expires at the end of the year. So do extended unemployment benefits. Plus, there's a mandatory Medicare savings from cutting reimbursements for doctors that begins January 1st.
All these tax increases and benefit cuts have gotten the attention of economists like Len Burman at Syracuse University.
Len Burman: There is a concern that while the economy is still weak, that raising taxes, particularly on middle income people, could slow down the recovery.
Chiotakis: All right, John, well draw that out for me -- how do these things hit individual Americans?
Dimsdale: Well let's take a typical American family. Let's say that they're middle income earners -- they take home about $50,000 a year. The expiration of the payroll tax cut means that they'll be paying about $700 or $800 more next year in taxes. Plus, maybe their daughter has been unemployed for more than a year and so she won't get her unemployment benefits anymore -- so our family may have to help support her, or she'll even have to move back home. You can see why there's concern why the super committee throwing in the towel means middle class families could start closing up their wallets.
Chiotakis:Marketplace's John Dimsdale from Washington. John, many thanks.