Issues & AdvocacyFederal
President Barack Obama delivers his inaugural address at the U.S. Capitol in Washington, D.C., Jan. 21, 2013. (Official White House Photo by Chuck Kennedy)
Inauguration Over, Washington Gets Back to Reality
By Andrew Goldberg, Managing Director, Government Relations & Outreach
With the inaugural parades and the balls behind them, the President and Congress got back to work this week, seeking to find elusive common ground on a host of issues that affect architects and the built environment.
A major point of contention between the parties was seemingly averted last week when House Republicans announced plans to lift the debt ceiling until the middle of May, without pairing it with spending cuts, which the President opposed. In return, House Republicans have proposed withholding the pay of lawmakers if both chambers fail to pass a budget resolution by April 15; the Senate has not passed a resolution in four years.
The good news for the building industry is that, for the time being, the possibility of a government default and the resultant economic shock waves, is off the table. Further, passage of a budget resolution could help to chart a long-term plan for future spending and tax policies. However, the parties are still far off on how to address the budget; Republicans are seeking a plan to balance the budget in 10 years, without raising taxes, while Democrats want taxes to be a part of the discussion.
Even if the debt ceiling is temporarily resolved, however, two other deadlines loom: the budget sequestration, which Congress delayed two months as a part of the New Year’s fiscal cliff deal, kicks in on March 1. A 2012 AIA analysis found that sequestration could cost as many as 60,000 jobs in the design and construction industry. Then, on March 27, current funding authority for nearly all federal agencies expires; without action, the government could shut down.
Both parties are still expressing support for reform of the tax code – but what that reform looks like is still a mystery. Democrats are hoping to raise additional revenue from tax reform to help close the deficit, while Republicans want reform to be revenue-neutral.
Furthermore, the scope of tax reform remains unclear: last year the White House proposed reforming only the corporate tax structure, while leaving individual tax rates untouched. This would mean that pass-through entities, including S corporations and partnerships, would be left out and could see their tax liabilities increase. Republicans, particularly House Ways and Means Committee Chairman Dave Camp (R-MI), have said that reform must include both corporate and individual taxes.
Beyond that, tax reform could also threaten the hundreds of tax incentives, credits and deductions taxpayers use to lower their liability- including many that impact the built environment. While it is extremely unlikely that the home mortgage interest deduction would be eliminated, other incentives for affordable housing, historic preservation and energy efficiency could be on the chopping block.
Energy and the Environment
During President Obama’s inaugural address stated that “we will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations.” This signals that environmental issues will continue to be a priority of the administration in the second term. However, the prospects for action on far-reaching energy legislation in a divided Congress remain dim at best.
Observers expect much of the action on energy issues to take place at federal agencies, like the EPA, which is expected to continue using its rulemaking authority to attempt to limit greenhouse gases. Meanwhile, Congress will likely work to limit the EPA’s authority through legislation blocking certain regulations or stripping it of funding.
Infrastructure and Buildings
With Congress having passed a two-year transportation bill in 2012, it is not expected that large-scale infrastructure bills will surface on Capitol Hill this year. With the focus on cutting spending, the ability of infrastructure advocates to secure more funding is severely limited. Instead, Congressional committees plan to look at contracting rules to ensure that small businesses, including in the design and construction industry, are not shut out of a shrinking pie.
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