This week, the Congress-appointed Supercommittee announced it failed to reach an agreement on how to reduce the nation's budget deficit by $1.2 million over the next ten years.
CUNA, as well as the League have been on top of the discussions and how this recent announcement could affect credit unions. The League is relieved that the Supercommittee did not put forward a proposal that would negatively impact credit unions, the failure of the Supercommittee to reach a conclusion has brought another issue back to the table.
Following the Nov. 21 announcement, the LSCU is hearing more conversation about the possibility of bringing the Bowles–Simpson Deficit Commission Report forward as a proposal. So far, this has been only speculation in the media and some conversation on the Hill that it may be pushed by three senators. As you may recall, the Bowles-Simpson Report recommends elimination of all “tax expenditures” which includes all tax credits and tax exemptions. Obviously, this would be devastating for credit unions.
At this point, the League's contract lobbyist is working his contacts on the Hill, and League staff is working on their contacts within their delegation to determine the likelihood of this even being proposed. It would appear that as of now, this is just a discussion among some senators. It may not amount to anything, and even if it did gain traction in the Senate, it would be very difficult for it to move in the House. The LSCU is taking nothing for granted and are working on it in Washington now. At this point, there is no cause for alarm, and we are NOT asking credit unions to contact members of Congress. That would be premature at this point. The LSCU will continue to work with their contacts on the Hill and if any action is necessary, they will contact credit unions and let you know what action would be needed.
CUNA Update on Supercommittee
Our interest in this Supercommittee process has been, of course, the possibility that the credit union tax status might somehow get in the mix of possible deficit reduction measures," said CUNA President/CEO Bill Cheney. "From the beginning, we assessed this threat as “low, but not zero.” Even still, we took this threat very seriously because of the unprecedented nature of the process by which Congress was attempting to deal with deficit reduction. The Supercommittee had unprecedented ability to report legislation to both chambers of Congress for an up-or-down vote. If they had reported legislation that included language eliminating or altering the tax status, it would have been impossible to remove it, short of defeating the entire agreement."
Cheney added, "over the last four months, we have engaged each member of the Supercommittee, their staff and other key policymakers on Capitol Hill and within the Administration." The message we received from all involved was:
1) Credit unions are not on the radar screen
2) Don’t do anything to put credit unions on the radar screen 3) Be ready in the event that credit unions get on the radar screen
With that admonition coming unanimously from officials in Washington, the strategy for ensuring the preservation of the tax status relied on strategic and coordinated contacts with the members of the Supercommittee and their staffs. CUNA asked the leagues with members on the Supercommittee, as well as their lobbyists, to maintain regular contact with committee members and key staff to emphasize the importance of the tax status to credit union members and gather intelligence on the activity of the committee.
With the announcement by the Supercommittee leadership, the threat that this process posed to the tax status has been eliminated. Nevertheless, Congress still faces a very significant deficit problem; efforts to address this will continue and may, in the future, involve renewed calls for the elimination of all tax expenditures. And, CUNA acknowledges that the bankers will continue to lobby aggressively for the taxation of credit unions. Credit unions must not let their guard down. Preserving the credit union tax status is CUNA's top priority and they will continue to monitor the threat to the tax status that could develop should Congress engage in comprehensive tax reform efforts in 2012 or 2013.
For more information about Congress's Supercommittee failing to reach an agreement and what it means for credit unions moving forward, contact LSCU SVP, Governmental Affairs
Will McCarty at 866.231.0545, ext. 2137.