Tuesday, August 02, 2011

President Signs Budget Control Act Creating Joint Select Committee to Draft Deficit Reduction Legislation

The President has signed legislation raising the debt ceiling and creating a bi-partisan Joint Select Committee on Deficit Reduction charged with drafting legislation to reduce the deficit under expedited procedures providing for an up or down vote in Congress by the end of the year. The Joint Committee would be composed of six Senators and six House members selected by congressional leaders.

There is a distinct possibility that the Joint Select Committee’s draft legislation will include elements of tax reform similar to the so-called grand bargain between the Administration and House Speaker John Boehner (R-OH) that ultimately fell apart. This scenario, which is by no means certain but may appear more probable as the members of the committee are appointed, could address tax reform issues around carried interest, LIFO accounting, off-shore tax havens and the is misalignment of the federal rax code and financial accounting standards that can have a profound impact on company financial statements filed with the SEC.

The Joint Committee will operate under the below strict timeline:

Within 45 days of enactment: Joint Committee must hold its first meeting
November 23, 2011: Joint Committee must vote on its report and recommendations with accompanying legislative language.
December 2,. 2011: Joint Committee must submit the report and legislative language to the Obama Administration and House and Senate leaders
Next legislative day after December 2: The proposed legislation must be introduced in the House and Senate
December 9, 2011: House and Senate committees to which legislation referred must report legislation to the floors without amendment
December 23, 2011: Congress must vote the legislation up or down without amendment