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What We Hope to See From the Extensions Conference Committee

January 25, 2012 |

At the end of last year, lawmakers enacted a temporary two-month extension of several policies set to expire, including the temporary payroll tax holiday, expanded unemployment insurance, the doc fix, and various health provisions. Encouragingly, the $33 billion cost of the extensions was fully offset over a ten-year period and a Conference Committee was appointed to determine how any further extensions would be treated.

As the Conference Committee works to address these expiring policies, it should strive to focus on long-term solutions as opposed to short-term patches. Ideally, the Committee should view the extensions of these policies within the broader economic and fiscal context, using them as an opportunity to advance a comprehensive fiscal plan.

Structured correctly, such a package can have a positive short and long-term economic impact, providing certainty to businesses and individuals and putting the country on a more sustainable path.

To achieve this, the Conference Committee should:

  1. Include policies to put in place, or move the country toward, a comprehensive plan to stabilize and reduce long-term debt.
  2. Ensure that the costs of any extensions are fully offset over a five to ten-year period.
  3. Put in place permanent solutions for expiring provisions where appropriate.

The Conference Committee should not:

  1. Make temporary stimulus or job creation measures permanent, or make it easier to continue extending them in the future.
  2. Dismantle the sequester or otherwise add to the deficit.
  3. Rely on budget gimmicks for offsets.

 

Click here to read the full paper on CRFB.org.

Click here to read the full PDF of the paper, or download it to the right.