Congressional leaders are considering whether to delay automatic federal spending cuts until March 2013. The $1.2 trillion in automatic spending cuts over a decade, half of which would affect the Department of Defense, are scheduled to begin in January 2013. At the same time, lawmakers must decide what to do about income tax cuts and other tax breaks scheduled to expire at the end of the year.
Leaders in both chambers are discussing whether to propose a catch-all bill that would delay the automatic cuts, fund the government through March or later, and temporarily extend the Bush-era tax cuts and other tax laws. The measure would follow a short-term stopgap spending bill to keep the government operating after October 1, the beginning of the fiscal year.
The automatic cuts are required by the 2011 agreement to raise the U.S. debt limit, and the cuts were designed to require Congress to find other deficit-reduction proposals to replace them. So far, there has been no agreement among lawmakers on such a plan. The outcome of the November elections will help determine what action Congress will take to avert the automatic budget and tax changes.
