(Reuters) – Sharp U.S. tax increases and government spending cuts will take effect in January unless Congress and President Barack Obama can agree on a package of deficit reduction measures.
With lawmakers rushing to avert events that could trigger another recession, here is a look at key dates ahead, with estimated impacts based on research by the Tax Policy Center and the Bipartisan Policy Center, both non-partisan think tanks.
* December 14. This was the targeted adjournment date for the U.S. House of Representatives, but it has been postponed. The U.S. Senate has not set an adjournment date.
* December 17. Unofficial optimal date to have a “framework” for a deal in place, congressional aides say, in order to permit time for review and procedural delays in Congress. Congress can go beyond this time without much trouble, however.
* December 21. Target date for a final deal that would permit lawmakers a full holiday break, aides say.
The House could be in session through at least December 21 and will not adjourn “until a credible solution to the fiscal cliff has been found,” according to Republican House leadership.
* December 24. Some skeptical aides say Congress will work to Christmas Eve, possibly reaching a deal, or possibly not.
* December 25. Christmas holiday.
* December 26-31. If no deal has been reached by this time to raise the government’s debt ceiling of $ 16.4 trillion, the U.S. Treasury Department will have to take “extraordinary measures” to put off possible default, as it has done before.
If Congress does not have a “fiscal cliff” deal before Christmas, lawmakers may have to return to Washington this week.
* January 1. Expiration of low tax rates enacted under President George W. Bush and extended in 2010 under Obama. This event would raise taxes an estimated $ 1,600 per U.S. household annually.
Expiration of Obama payroll tax cut of 2011 and 2012. This would raise taxes an estimated $ 700 per household.
Deadline for dealing with “tax extenders” such as the corporate research and development tax credit. These and other items must be extended by year-end to be claimed in 2013.
Deadline for fix to the alternative minimum tax. Without action, the AMT will increase the tax bills for an estimated 27 million more Americans. The Internal Revenue Service will need to reprogram systems and delay refunds for millions of taxpayers until late March if the fix is not passed.
* January 1. New taxes take effect under Obama’s healthcare overhaul. One is a 0.9-percent increase in wage income tax for individuals earning more than $ 200,000 a year. The other is a 3.8-percent Medicare tax on investment income above the same level. These take effect regardless of the cliff outcome.
* January 2. Without congressional action to waive or postpone them, spending cuts of $ 1.2 trillion over 10 years begin. Known as “sequestration,” these were put in place in 2011 after a congressional “super committee” failed to devise a fiscal plan.
* January 3. The new Congress is scheduled to convene.
* January 7-11. Congress scheduled to be out of session.
* January 14. Congress scheduled to reconvene.
* January 20. Presidential inauguration day. A public ceremony is planned for the following day.
* February. White House releases annual proposed budget. Treasury exhausts its “extraordinary measures” and U.S. faces possible rating downgrade again.
* March. Funding of federal government expires with the expiration of a continuing resolution.
(Reporting by Kevin Drawbaugh, Richard Cowan and Kim Dixon; Editing by Fred Barbash and Eric Beech)
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Timeline: Key dates ahead as Congress confronts “fiscal cliff”
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