Congress' upcoming fights are over jobless aid and tax breaks

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WASHINGTON (AP) - Congress' failed deficit-cutting supercommittee has faded away, but the pressure on lawmakers to quickly confront a stack of expensive economic issues is only growing.

Before leaving town for Christmas and New Year's, lawmakers face decisions on whether to renew payroll tax cuts that have meant an average of nearly $1,000 for more than 120 million families this year. Congress also must determine whether to extend unemployment benefits for millions of long-term jobless Americans.

Without action, both expire Jan. 1.

Also on the list: Whether to prevent a 27 percent cut in Medicare reimbursements to doctors that occurs on New Year's Day. And oh, yes - figuring out how to avoid an embarrassing mid-December government shutdown, something that has become a frequent exercise in today's bitterly divided Congress.

Protecting the payroll tax cuts, jobless benefits and doctors' payments could cost $200 billion or more. But faced with a limp economy, the huge federal debt, next year's presidential and congressional elections, and the supercommittee's finger-pointing, partisan breakdown, clashes over each are inevitable.

"Right now people are so mad and suffering so much from fiscal fatigue that it's really hard to say what they want," Steve Bell, a longtime Senate Republican budget aide who studies economic policy at the moderate Bipartisan Policy Institute, said of lawmakers.

In a deal with Obama last year, Congress cut the 6.2 percent payroll tax - which helps finance Social Security - to 4.2 percent for this year. That has saved 121 million families an average $934 this year, according to the nonpartisan Tax Policy Center.

Obama has proposed cutting it to 3.2 percent next year at a cost of $179 billion, plus adding another $69 billion in payroll tax breaks for employers. With Republicans and some Democrats wary of the national debt - which surpassed $15 trillion last week - the price tag well could shrink.

Meanwhile, Democrats also want to renew unemployment benefits that provide people with up to 99 weeks of coverage before the extra benefits expire Jan. 1. Without the added coverage, benefits - which average under $300 a week - would last a maximum of 26 weeks.

Without action, more than 2 million people would lose unemployment coverage by mid-February, according to the Labor Department. It would cost an estimated $45 billion to renew the extra benefits for a year.

Preventing the cut in Medicare payments to doctors is estimated to cost more than $20 billion next year. It is considered a near certainty that Congress will address it because of the clout that Medicare and doctors have with lawmakers.

Also, a long-running war between Democrats and Republicans over Bush-era tax cuts doomed the debt supercommittee's chances of reaching a deal. Efforts to overhaul the tax code may await the same fate as both parties gear up to make taxes a central issue in the 2012 elections.

Extending all the Bush tax cuts, including provisions to spare millions of middle-class families from paying the alternative minimum tax, would add $3.9 trillion to the budget deficit over the next decade, according to projections by the nonpartisan Congressional Budget Office. The Democratic plan would add about $3.1 trillion to the deficit over the same period and make the wealthiest Americans pay about $800 billion more in taxes.


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