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The Budget Deficit

By Andrew Goldberg, Managing Director, Government Relations & Outreach

President Obama and Gov. Mitt Romney have both pledged to reduce the deficit – but they disagree on how to get there. According to the nonpartisan Congressional Budget Office, in the fiscal year that just ended the federal government spent $1.1 trillion more than it took in. Most experts agree that the deficit poses long-term dangers for the economy as interest payments on debt increase.

But how should the country reduce the deficit? Decrease spending? Reform entitlements like Medicare and Social Security? Raise taxes? The issue goes to the heart of the debate between Democrats and Republicans.

It is an issue that affects architects and the built environment as well. Architecture firms and their clients pay taxes. Numerous federal programs fund the design and construction of buildings, either directly (think federal buildings) or indirectly (such as community development programs). Of course, any policy changes that impact the overall economy will impact the design and construction industry. Therefore, the choices that the winner of this election will make matter.

IN THEIR OWN WORDS

OBAMA. According to his campaign’s website, President Obama is offering a “specific, balanced plan of spending cuts and revenue increases that reduce the deficit by more than $4 trillion over the next decade, including $1 trillion in spending cuts he signed into law last summer as part of a deal with congressional Republicans.”

Obama’s budget “includes investments in education, manufacturing, and infrastructure, while bringing discretionary spending to its lowest level as a share of the economy in more than 50 years.”

President Obama also believes that “No household making more than $1 million each year should pay a smaller share of their income in taxes than a middle-class family pays.” He has proposed ending the 2001 and 2003 tax cuts for those making over $250,000 per year. In addition, according to the Democratic Party platform, the president supports “closing loopholes and deductions for the largest corporations and the highest-earning taxpayers.”

ROMNEY. According to his campaign’s website, Gov. Romney has proposed “bring[ing] federal spending below 20 percent of Gross Domestic Product (GDP) by the end of his first term, reduced from 24.3 percent last year; in line with the historical trend between 18 and 20 percent.” According to the campaign, the plan “requires spending cuts of approximately $500 billion per year in 2016 assuming robust economic recovery with 4% annual growth.” Romney has said he would “Send Congress a bill on Day One that cuts non-security discretionary spending by 5 percent across the board” and would pass the House Republican Budget proposal, which would “cap… non-security discretionary spending below 2008 levels.”

According to the Republican Party’s platform, Romney would “Extend the 2001 and 2003 tax relief packages ...pending reform of the tax code, to keep tax rates from rising on income, interest, dividends, and capital gains.”

THE AIA’S TAKE

Architects are willing to do their fair share to help reduce the deficit. Just as design and construction projects can falter and fail if budgets get out of line, so too can government policymaking if large, chronic deficits persist. The AIA will continue to educate policymakers of both parties about the impacts – positive and negative – of specific budget and tax plans on the architecture profession and the built environment. For example, last week the AIA released an analysis showing that immediate budget cuts currently scheduled to take effect in January 2013 could reduce federal design and construction budgets by more than $2 billion.

In recent years, the AIA has worked to oppose proposals that would single out architecture firms for tax increases, believing that taxes should be levied fairly. While recognizing that comprehensive plans to reduce government spending will necessarily affect all parts of the budget, the AIA has worked to promote policies that save taxpayers money in the long run by spending money on energy efficiency improvements and other building upgrades that lower operations and maintenance costs.

We hope you will add your thoughts and comments to the discussion on Facebook. And if you think we missed an important point or facet of the candidates’ platforms, let us know at govaffs@aia.org.

For more information on how AIA DesignVote12 can help you participate in the 2012 election, please click here.

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This content is published by the AIA Government and Community Relations Department, 1735 New York Ave., NW, Washington, DC, 20006. To contact the AIA’s Government & Community Relations team, send an email to govaffs@aia.org.