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On Pledges and Politics – How the Debt Ceiling Debate Affects the Fraternal Tax-Exemption…

Whew! Congress and the President worked out an 11th-hour compromise that preserved the nation’s credit rating and prevented August Social Security checks from bouncing like a rubber ball. We can all breathe a big sigh of relief, right?

I don’t know about you, but I’m feeling a little “dis” about the events of the past month – disgusted, dismayed, disappointed, disenfranchised… This was no grand bargain; it was partisan politics at its worst. The pledges many lawmakers signed when they took office (to oppose any new taxes or to oppose any cuts to social programs), painted them into a corner leaving no room for any real debate on the most substantive programs contributing to the nation’s economic ills – Social Security, Medicare, and defense spending. The result was a classic “kick-the-can” compromise – a punt, rope-a-dope, the Dean Smith four-corners stall – that once again puts off until tomorrow what needs to be addressed today.

Pardon my cynicism, but throughout this whole dog-and-pony show, the only thing I saw was two sides seeking ways to advance their own self-interest – the GOP’s main objective being to do everything possible to make Barack Obama a one-term president and the Democrats doing everything possible to ensure that the debt-ceiling debate doesn’t have to be addressed again before the November 2012 elections.

So now we’re waiting for the creation of a “Super Committee” to tackle the tough issues. Let’s hope that the room they use for these negotiations is free of kryptonite…

Fraternals do have skin in this game…

Despite my skepticism, the nation – and the fraternal system – has a lot at stake in the Super Committee’s negotiations. Based on information from the Alliance’s federal lobbying team, the thinking is that the debt Super Committee is going to look at taxes in some ways. There is a big divide among people who think taxes will be on the table and those who want no taxes in the deal. There is a lot of talk that since they are using the Congressional Budget Office (CBO) baseline, taxes won’t help the committee reach its targets. While that may be true, we don’t believe that this will take taxes off the table. There is some thought that corporate tax reform gets dealt and individual rates will not be addressed. Dealing with both corporate and individual taxes may be too tall a task for a committee that has only a few months to formulate a deal. In any case, it is likely that some tax loopholes and expenditures will be addressed.

So, what does that mean for fraternals? We have to remain vigilant and make sure the Super Committee and other key members of Congress know us. We made significant inroads on this objective during our “Day on the Hill” activities held during the Presidents Section meeting in Washington, D.C., earlier this year, and we need to continue the momentum we established then by meeting with lawmakers on Capitol Hill and, more importantly, at home during breaks in the congressional calendar.

Right now repeal of the fraternal exemption is not on anyone’s priority list – and we want to keep it that way. The best way to accomplish that is to ensure that public policymakers know who we are and what we do. We’re in a much stronger position when lawmakers are familiar with our brand, our values, and our contribution to the financial health and well-being of their constituents. If you want to join our grassroots effort to make sure members of Congress (and state legislators, too) get the fraternal message, please contact Elizabeth Snyder, Director, Advocacy and Public Policy, at esnyder@fraternalalliance.org.

Super Committee Schedule

  • 8/16 – Joint Committee members are appointed. (3 Dem. Senators, 3 GOP Senators, 3 GOP Representatives, 3 Dem. Representatives)
  • 9/16 – 45 calendar days after bill passes – First Joint Committee meeting
  • 10/14 – Each Senate & House committee may send Joint Committee recommendations for changes to reduce deficit by at least $1.5T. Makes for a busy Sept/early Oct.
  • 11/23 – Joint Committee (JC) votes on a 1) report containing a detailed statement of the findings, conclusions, and recommendations and the estimate of CBO, 2) proposed legislative language.
  • 12/2 – If approved, the JC submits the report and legislative language to the Pres, the VP, and the Hill.
  • Next legislative day – JC’s legislative language is introduced in Senate and the House.
  • 12/9 – Any House and Senate Committee to which the JC language is referred to must report it to the House and Senate without amendment. If Committees fail to report by this day, it will be automatically discharged to the House and Senate. In the Senate, the motion to proceed is not debatable. Consideration and debate limited to 30 hours. No amendments are in order.
  • 12/23 – Vote on JC bill in both House and Senate.
  • 1/31/12 – Joint Committee terminates.

Stay tuned. This could get interesting…

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