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The new Congress will focus on spending cuts

One thing is certain when the 112th Congress convenes in January: Republicans and conservative Democrats will push hard for massive reductions in federal spending.

The GOP leadership is proposing a one-year, 22% reduction in federal spending package for most government operations while exempting Defense, Homeland Security and Veterans programs. But, such a move wouldn’t make a dent in the deficit, which means that borrowing will have to continue. And that sets the stage for a showdown vote in the spring over raising the federal debt limit, with the alternative being to force the country into default and shut down the government.

Raising the Debt Limit

Potentially the most explosive issue that will have to be dealt with during the opening months of the next congress is a vote to raise the debt limit. Last February, Congress raised the ceiling on the national debt to $14.2 trillion. Since then the debt has risen to $13.7 trillion – which means Congress will have to raise it yet again in a few months. A failure to do so would stop the government from borrowing money and the government would not have the money to pay bills. Congressional members of the Tea Party have vowed to oppose further increases, and it is unknown at this time whether they will hold to those promises or “play ball” with Republican leaders who will be willing to support an increase in return for spending cuts.

Blocking Health Care Reform in Small Pieces

As noted earlier, there will also be a move to repeal the Obama health reform legislation. But Republican leaders privately admit they do not have the votes for outright repeal. So they will use the power of the purse by passing appropriations bills that bar federal money from being used to carry out specific sections of the new health care law. And they could block the issuance of new regulations to implement the law. Finally, there is discussion of limiting the money and personnel available to the Internal Revenue Service to enforce provisions that require people to obtain health insurance and employers to help pay for it.

The new rule requiring businesses to issue 1099 forms for all payments of more than $600 is among those provisions likely to be blocked or modified in this way. But opponents of the health care law will have to be strategic because some components of the law, such as the provisions extending health insurance coverage to dependents up to the age of 26 and not allowing insurers to discriminate against children with preexisting conditions are very popular with voters.

A Moratorium on Earmarks

The new Republican majority in the House will push for an end to “earmarks,” specific spending designations for pet projects in a member’s district. The Democratic Senate is expected to block that plan, but supporters will push for a two-year moratorium that appears to have a chance of passage.

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