Perspectives - January/February 2014 - (Page 40)

legislative update From Crisis to Crisis T o the casual observer, Congress appears to have been legislating U.S. fiscal policy on a crisis-to-crisis basis since the first showdown over the debt ceiling in August 2011. That deal set the stage for the fiscal cliff crisis that was resolved at the beginning of 2013. The fiscal cliff deal also set the stage for last September's government shutdown, which was packaged with another debt ceiling showdown that put the nation's credit rating on Ratings Watch Negative by global credit rating agency Fitch Ratings. The most recent crisis-averting deal requires the House and Senate to assemble a conference committee to submit a budget by December 13, includes January 15, 2014 as the deadline for the current continuing resolution funding government operations, and predicts February 7 as the day the Treasury hits the debt ceiling. As of press time, the budget conference is expected to convene on October 30 and nothing more is expected other than some relief from sequestration (a result of the 2011 deal), which both parties agree has not worked in anyone's favor. Both sides have conceded that trying to negotiate new revenue is futile. Senate Majority Leader Harry Reid expects any deal to come out of budget conference to simply mitigate the effects of the sequester, while House Budget Chairman Paul Ryan warned that if the budget conference committee is "used as an excuse to raise taxes, it's not going to be successful." It has been previously pointed out in this column that Democrats and Republicans cannot agree on the very fundamentals of fiscal policy-that is spending versus revenue-and that has not changed. Unless that dynamic changes and compromises are made on both sides, any undertaking on fiscal policy such as tax reform or a proper budget and appropriations process would be a Herculean task. With the January 15 deadline marking the end of the current continuing resolution, Washington observers wonder if there will be another shutdown. If a budget deal does not happen before the deadline, Congress will either have to agree to another stopgap measure to fund government for an extended period of time, or shut down the government once again. It would be politically disastrous for House Republicans to try to force Senate Democrats and the White House to agree to anything more than a clean continuing resolution under threat of shutdown. The political headache for Republicans would 40 perspectives JANUARY/FEBRUARY 2013 be compounded if such a shutdown would extend to the February 7 deadline to extend the debt ceiling. However, Republican leaders in both the House and Senate have publicly stated that the shutdown situation is not a situation they intend to repeat. Therefore they will not support any strategy that employs the threat of another shutdown in order to gain policy concessions from Senate Democrats or the White House. Simply put, don't count on another shutdown happening anytime soon. Congress is also expected to raise the debt ceiling in time to avoid a default or another warning from ratings agencies such as Fitch, Moody's, or Standard & Poor. This offers an interesting perspective on what the tax reform debate will look like. If Congressional leaders aren't willing to negotiate on what are arguably the very basic tenets of tax policy, how can they be expected to pass comprehensive tax reform? As far as individual tax reform is concerned, tax writers may have to settle for the 39.6% top rate that was agreed upon after last year's fiscal cliff deal. Any effort by Democratic lawmakers to push a higher top marginal rate, or by Republican lawmakers to push for a lower rate, will be futile. But not all hope is lost for some kind of reform, at least on the corporate side: through contacts with lawmakers and industry advocates, NAILBA Government Affairs has learned that lawmakers on both sides are open to a tax reform bill that would lower the corporate tax rate to 25% in return for the elimination of certain tax expenditures. Whenever the discussion of tax expenditures comes up, we immediately think inside buildup. Inside buildup regularly appears on the Joint Committee on Taxation's Estimates of Federal Tax Expenditures, which is published annually and referenced by tax writers in search of potential sources of revenue. But as NAILBA Chair Barbara Crowley pointed out at NAILBA 32, our advocacy efforts have unearthed a growing sentiment by lawmakers that inside buildup should be off the table when it comes to eliminating tax expenditures. It's good to see some kind of bipartisan agreement. But until it is actually written, we must continue our current course of vigilance. Mark Valent ini, M PP i s NA I L BA's D ire c tor of Government Affairs. You can contact him at 703.383.3073 or to learn more about NAILBA's advocacy efforts.

Table of Contents for the Digital Edition of Perspectives - January/February 2014

NAILBA Perspectives - January/February 2014
Chairman’s Corner
CEO Insights What’s New at NAILBA?
The New HIPAA Information Requirements
NAILBA 32 Highlights
Reading Ahead
In Vogue: Life, LTC & Annuity Product Trends
NAILBA Charitable Foundation What a Great Year it Was!
Member Profiles
Agency Successor Networking Group
The Power of LIFE Behind You
Agency Resources
Legislative Update
Index of Advertisers
Calendar of Events

Perspectives - January/February 2014