(Originally published in the October issue of Bruce R. Hopkins Nonprofit Counsel, available electronically to subscribers on publication.)
One of the key elements of the Budget Control Act of 2011 (Pub. L. No. 112-25) that was signed into law on August 2 is creation, in Congress, of the Joint Select Committee on Deficit Reduction. The charge of this committee is to create legislation that reduces the federal deficit by at least $1.5 trillion over fiscal years 2012–2021.
The formal duty of the joint committee is to “provide recommendations and legislative language that will significantly improve the short-term and long-term fiscal imbalance of the Federal Government.” House and Senate committees may make recommendations to the joint committee; they must do so by October 14. This goal assigned to the joint committee has the potential of inclusion of proposed tax law changes, including revenue-raising proposals.
By November 23, the joint committee must vote on a report containing its findings, conclusions, and recommendations. At least seven of the twelve members of the committee must approve the report and accompanying legislative language. This report and language must be transmitted to the congressional leadership, and the president and vice president, by December 2.
The joint committee is authorized to hold hearings, require attendance of witnesses and production of documents, receive evidence, and administer oaths. The legislative language is to be considered by the House on an expedited basis, with committees reporting by December 9. A similar procedure applies in the case of the Senate. The vote in both houses must occur by December 23; the joint committee bill is not subject to amendment.
The joint committee bill will lose its privileged status if the committee fails to vote on the report or legislative language by November 23 or if the bill does not pass the House and Senate by December 23. If a plan is not enacted by January 15 of next year, substantial across-the-board spending cuts will kick in (evenly split between military and nonmilitary expenditures).
Commentary: It is, of course, foolhardy to predict what the select committee will do, for many reasons, one being the little time it has in which to do it. In the realm of nonprofit organizations, there will likely be spending cuts in fields such as education, health care, housing, and scientific research. As to tax law revisions, many (if only because of Standard & Poor’s federal government’s credit rating downgrade) are calling for a return to the recommendations of the National Commission on Fiscal Responsibility and Reform, which recommended deficit reduction in the neighborhood of $4 trillion (as discussed in the February 2011 issue). That would mean that tax expenditures are back on the table, including the charitable deductions and perhaps some tax exemptions.
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