Economy & Budget

When it comes to the federal budget standoff, those looking for a breakthrough are caught between a rock and a hard place. One side offers all cuts and no revenues to reach a balanced budget. The other offers tax increases with some spending cuts to appear even handed, but never actually moves the nation’s finances from red to black. 

Uncertainty over the ultimate solution has businesses keeping capital on the sidelines, waiting to see what the playing field will look like in the months ahead. It is time to get a big deal to fix the nation’s debt and deficit problems and get everyone back in the game.

In one convincing and catastrophic stroke, Hurricane Sandy proved that it’s not simply about sand, boardwalk planks, and rich mansions being swept out to sea.
 
Television cameras always seem to capture that first, leaving a lasting, though false, impression that only businesses and wealthy beach towns need rescuing. Nothing could be further from the truth.
 
What you don’t see is the sheer magnitude of lower- and middle-class families that remain devastated after the cameras leave.
 
A March 2013 NYU Furman Center for Real Estate and Urban Policy study showed that low-income families were hit hardest by Sandy. Fifty-four percent of New York City homeowners who applied for FEMA aid make less than $60,000 per year.
 
A February 2007 Government Accountability Office study found that Hurricanes Katrina and Rita affected some of the poorest areas of the country and that many of those affected were receiving federal assistance from social security, disability, and food stamp programs.

This week, the House is scheduled to vote on legislation I introduced to address the ongoing legal chaos that surrounds the National Labor Relations Board (NLRB). On January 4, 2012, President Obama made three so-called recess appointments to the NLRB while the Senate was regularly meeting in pro forma session. These appointments were unprecedented—no other president has bypassed the constitutionally-mandated nomination process while the Senate was in session. Although the White House claims such appointments were within the president’s power, the record shows Democrats have opposed such tactics. 

This month, Rep. Albio Sires (D-N.Y.) reintroduced legislation that would create a federal backstop for disaster insurance, replacing private-sector insurance with the American taxpayer. It is a “Beach House Bailout” that will put billions of taxpayer dollars at risk to help those who have beach houses and other types of beachfront properties while still leaving communities vulnerable to severe storms.
 
Rep. Sires’ bill (HR.1101) would displace private property and casualty insurance with a costly federal reinsurance scheme and loan program to bailout state insurance programs. The Beach House Bailout would create a national catastrophe fund and loan program designed primarily to subsidize expensive beachfront homes, at taxpayers’ expense, in Florida – the world’s most active hurricane region. This federal government backstop would add significant new taxpayer obligations that would do little to dis-incentivize the risky behaviors that exacerbate the impact of major climate events.

Automatic federal spending cuts are here and the time for contemplation is over. Now the question for those of us in industry is whether to hunker down or be tenacious. Those of us in the aerospace and defense industry have known even prior to discussions about sequestration that we would face belt-tightening amid a series of global fiscal challenges. We have known a protracted downturn in defense and traditional markets would force us to decide between weathering the storm and being proactive in both traditional as well as adjacent marketplaces.

As members of both parties in the House and Senate as well as the president look to comprehensive tax reform as a way to reduce the deficit in the long term and increase our economic stability, it’s important to note that not all tax credits are created equal. Undoubtedly, some should stay, but, which ones?
 
To help inform the decisions, the House Ways and Means Committee created eleven tax reform working groups, which are examining portions of the tax code and soliciting public comments through April 15. Soon after, the results of the review and comment period will be shared with the full committee in a report by the Joint Committee on Taxation.

In our highly partisan environment there seems to be very few issues that Republicans, Independents and Democrats agree on. This partisanship is easily seen in Congress but is also alive with voters across the country. Small business owners are often no different than their customers in demonstrating divergent opinions on issues depending on their political preferences.

Today Senator Dick Durbin is reintroducing a critical bill that will cap interest rates on predatory credit. The “Protecting Consumers from Unreasonable Credit Rates Act” is a desperately needed law that will finally crack down on strip mall loan sharks and shady internet lenders alike, but it would also put the brakes on the dirty little secret of the predatory lending industry: big bank payday lending.
 
Some of America’s largest banks, back to record profitability after the bail-outs, have started offering their own customers triple digit interest payday loans with names like “Direct Deposit Advance.” These short term, high interest loans, commonly known as “payday loans” are decimating the bank accounts of some of America’s most vulnerable residents and they must be stopped.

A newlywed couple puts down roots in a growing community by buying a new home. They pay for the home with a conventional mortgage from a large nationwide bank that specializes in mortgage lending.
 
The house that the couple buys was built with the help of a regional bank’s acquisition, development and construction loan to a home builder. The neighborhood is located near a strip mall that was developed with a commercial real estate loan from a local community bank.
 
The shopping center’s occupants -- which include mom-and-pops as well as global restaurant and retail chain stores -- run their businesses with the help of financing, cash management, and payroll services offered by banks of all types and sizes.

We are at a critical point in making our healthcare markets work. The Affordable Care Act takes effect next year, creating new marketplaces for health insurance which hopefully will create an environment of transparency and choice that will spur competition. There are some new tools for federal and state enforcers to police these markets. Never has antitrust and consumer protection enforcement been as necessary, but there is an unfortunate obstacle – a 68 year old antitrust exemption for health insurance – the McCarran-Ferguson Act.

For consumers to receive the full benefits of health care reform, Congress needs to repeal the Act.