“Superfail” could hit Latinos in the wallet
The failure of the debt-reduction supercommittee, co-chaired by Sen. Patty Murray (D-Wash.), has forced Congress to deal with several expiring economic stimulus provisions. (AFP Images)
By FERNANDO PIZARRO
Channel: Politics
The failure of the so-called congressional supercommittee tasked with cutting $1.2 trillion from the deficit over the next ten years could actually have a significant impact on Latino’s wallets starting on Jan. 1.
While most of the automatic spending cuts triggered by the supercommittee’s failure to reach a deal will not take place until 2013, the payroll tax cuts instituted by President Obama expire at the end of this year. The supercommittee was expected to deal with an extension of those cuts as part of its proposal. Lawmakers will now have to pass separate legislation if they’re to be renewed.
Another consequence of the collapse of the supercommittee is the expiration on January 1 of unemployment benefits to those who have exhausted their current jobless checks.
With a Latino national jobless rate that ticked up to 11.4 percent last month, Hispanic organizations like the National Council of la Raza (NCLR) worry that Congress could fail to renew unemployment benefits.
“It’s money that every worker gets, who then goes out and buys food, clothing, pays his rent, and then this money stays in the economy,” said Leticia Miranda, associate director at NCLR.
The supercomittee’s failure to reach a deal will set off a series of major spending cuts starting in January 2013, including cuts to Medicaid providers. But many other social programs important to the Hispanic community are exempted for now from these cutbacks.
“There are many programs for poor people which are not subject to automatic cuts, among them, Social Security, Medicaid, and the supplemental nutrition assistance program known as SNAP or food stamps,” said Miranda. “These programs will be protected from cuts.”
Medicare would suffer a two percent cut in 2013, which is not expected to affect beneficiaries of the federal healthcare program.
The next few days will bring renewed talks in Congress on a separate measure backed by the White House to extend the expiring payroll cuts.
Traveling to New Hampshire, a key swing state with a Republican primary election on Jan. 10, Obama challenged Congress to avoid extending those tax cuts, saying that their expiration could make the prospects of an economic recovery even bleaker.
“End of next month, end of the year, this tax cut ends. And if we allow that to happen — if Congress refuses to act — then middle-class families are going to get hit with a tax increase at the worst possible time. For the average family, your taxes will go up $1,000 if Congress does not act by the end of the month,” said Obama at a high school gym in Manchester.
Though he has blamed Congress for the supercommittee’s failure, Obama took heat from protesters who were apparently part of the Occupy Wall Street movement at his speech Tuesday. They chanted against the arrests of protesters at demonstrations across the nation.
Despite worry from Latino groups, some observers are more optimistic that the payroll tax cuts and jobless benefits could be extended before the end of 2011.
“There seems to be a proposal in Congress to cut the payroll and renew unemployment benefits. I believe that can be handled separately, not as part of a global agreement, which is what the supercommittee was trying to do,” said economist Isaac Cohen, who is hopeful for a December breakthrough. “To give an image of fiscal discipline, which is what I think has been lost in all of this.”
There may be bipartisan support for a separate proposal simply to extend payroll tax cuts, but major differences between the political parties still remain on how to pay for that extension. With a Dec. 31 deadline looming, the White House will push for a vote as early as next week.
