Consumer Corner: Congress has a choice -- do nothing and watch automatic tax increases and deficit reduction kick in, or act responsibly and attack the issues head on

CHICAGO, Nov. 27 (UPI) -- There's an old adage: If Congress does nothing, lawmakers can't do any damage. We may want to rethink that.

Now that the supercommittee is but a memory, the whole Congress needs to take up the deficit-reduction conundrum. Democrats may see that failure as a victory for them because entitlements remain intact so far; Republicans may see that failure as a victory because no new taxes were imposed.

However, taken as a whole, that failure leaves us with a mounting national debt and not just the $1.2 trillion in triggered cuts, much of it coming from defense, due to take effect in 2013 and extend for a decade, but also the resumption of the full Social Security payroll tax reduction, an end to extended unemployment benefits for the 9 percent of the U.S. workforce still desperately looking for jobs, and on Jan. 1, 2013, $3.8 trillion boost in taxes. Nobody's been talking about the latter, which kick in if the George W. Bush tax cuts adopted in 2001 and extended last year finally sunset.

And though Democrats want to raise taxes on those at the high end of the pay scale, much of that $3.8 trillion is due to come from the middle class.

No action indeed could prove interesting if the economy continues to sputter. But 2013 is more than a year away and in Washington, that might as well be forever -- except President Obama last week swore he would veto any effort to push the deficit cutting down the road and with the 2012 campaign revving up, he is likely to dig in and make Congress take the heat.

"Already, some in Congress are trying to undo these automatic spending cuts," Obama warned last week.

"My message to them is simple: No. I will veto any effort to get rid of those automatic spending cuts to domestic and defense spending. There will be no easy off ramps on this one.

"We need to keep the pressure up to compromise -- not turn off the pressure. The only way these spending cuts will not take place is if Congress gets back to work and agrees on a balanced plan to reduce the deficit by at least $1.2 trillion."

The more immediate problem is the Social Security payroll tax, which the White House said will cost the average family $1,000.

As part of the tax cut extension adopted at the end of 2010, the Social Security payroll tax was reduced for 2011. At the time, predictions for the economic recovery were a bit rosier than reality produced. With the jobless rate remaining stubbornly high, consumers have been reluctant to kick-start spending although recent figures indicate they have opened their wallets a bit wider than they did since the recession hit.

To push Americans to push their congressmen, the White House last week unveiled a calculator to show how much the resumption of the payroll tax will cost individuals. (We tried to make it work in different browsers but could not get any answers.) The increase amounts to about $24 a week. The White House wants you to keep that $24 and reduce the payroll tax 1 percent more.

"If we don't act, taxes will go up for every single American, starting next year," Obama said. "And I'm not about to let that happen. Middle-class Americans can't afford to lose $1,000 next year because Congress won't act. And I can only hope that members of Congress who've been fighting so hard to protect tax breaks for the wealthy will fight just as hard to protect tax breaks for small business owners and middle-class families."

Perhaps the more critical problem is the extended unemployment benefits. With 13.9 million unemployed in October, and the average unemployed worker getting $295 a week, that's a lot of dollars that won't be circulated back into the economy. Then again, that's a lot of tax dollars that won't be distributed.

So the president has taken to the stump again to push his American Jobs Act, only a small piece of which -- the part concerning jobs for veterans -- has passed.

Senate Majority Leader Harry Reid, D-Nev., is expected to go on the offensive this week, moving legislation to expand the Social Security payroll tax cut and paying for it by dinging millionaires -- cost: $240 billion. Of course, the measure is mostly theater with the GOP still opposed to such tax increases.

A separate vote was expected on unemployment benefits -- cost: $44 billion spread over two years.

Then there's the alternative minimum tax, set up originally to make sure wealthier Americans paid their fair share but increasingly hitting middle-class households -- cost: $70 billion.

And then there are Medicare reimbursements. If Congress doesn't take action, providers stand to see their reimbursements rates reduced -- cost: $22 billion.

Also businesses stand to see tax credits expire -- cost $30 billion to $40 billion.

The debacle last summer over raising the debt ceiling -- something that used to be done routinely -- has cast a pall over the upcoming issues now that Congress has squandered the authority vested in the Joint Select Deficit Reduction Committee. If the supercommittee had come up with a plan, Congress would have had to vote it up or down -- no amendments, no filibusters.

Now it will be partisan bickering as usual.