Gorin: The Elections Are Over. Now What?

November 30, 2010 by   - () Comments Off on Gorin: The Elections Are Over. Now What?

David Gorin

As expected, the U.S. House of Representatives will be controlled by the Republicans by about a 246 – 189 margin at press time, and the Democrats will retain control of the Senate with 51 Democrats and two Independents in the majority.

Here’s the reality check: It is not going to make much difference in the legislative process. The Senate is the land of 60 votes and nobody is going to be close to having them in his or her pocket in the 112th Congress. Not much will likely get done and, on balance, one could make a case that that is not a bad thing.

If President Obama and Speaker-presumptive John Boehner, R-Ohio, change their styles and want to compromise a la President Clinton, the story line for the 112th Congress and President Obama’s chances for re-election might change. A deal between House Republican and President Obama on deficit reduction, for example, would force the Senate’s hand.

There are likely to be some pro-active opportunities for small business. While the big-ticket items will probably get caught up in filibusters, there could be consensus-building for small ticket items with a Republican majority in the House leading the way. A good example would be repealing the Form 1099 requirement. Some observers think that the House Ways and Means Committee could pop out a bill as soon as its first business meeting in January. There’s a slight chance of repealing the Form 1099 requirement in the lame duck session. More below on that.

Forget Health Care Repeal

Forget about health care repeal. The president is not likely to let such a thing occur without vetoing the legislation. Even if both chambers were to somehow pass a repeal bill (and with a Democratic-controlled Senate, that’s highly unlikely), there is that tiny thing called the Constitution that is going to prevent that.

Article I, Section 7, of the Constitution requires two-thirds majorities in both chambers to override vetoes. And while many may not fully endorse the health care legislation now on the books, it does accomplish one very important thing for family-owned smaller RV park and campground businesses by removing the ability of insurers to decline coverage because of pre-existing conditions. This has long been a significant problem for park owners who often have acquired their business as a second career and are often older with past medical histories that made getting coverage almost impossible.

I realize that that’s only one part of the new law. But until there are assurances that it would be maintained under any new legislation, it seems we need to hold on to what has been gained.

The election outcome is good news on the “smaller” small business issues like the Form 1099, maybe the self employed health care deduction, home office standard deduction etc.

What about the estate tax? The new House majority may be tempted to pass a repeal bill. But the small business community may prefer a reasonable higher exemption that might call for a quick negotiation with the Senate to get it done. With full repeal, it’s likely the Senate may balk. Either way, the chances of some estate tax relief in the 112th Congress have risen dramatically.

As for the Lame Duck Session

The 111th Congress is coming back and the principal decision is how to fund the government when the current continuing resolution runs out on Dec. 3. Some say, “Let’s force repeal of health care by refusing to pass a continuing resolution and shutting down the government.” Not a likely scenario.

There is a reasonable possibility of a deal on extending at least some of the expiring individual tax relief provisions like the rates and marriage tax penalty relief, among other things. But the best guess is that as the end of the lame duck session approaches, concerns about revenue offsets to tax cuts are going to take a back seat to “piling on” extra ornaments on the Christmas tree — also known as a tax bill, as the lame ducks approach the holidays.

So there’s likely to be more tax gifts for all and the new 112th Congress will have to deal with an even larger deficit.

Will the 112th Congress do even more tax cutting? The new Congress is going to be faced with a nasty tax revenue scoring problem any time it wants to provide tax relief. Remember, every tax cut is likely to add to the deficit, something that’s quite unpopular among the newly elected Congress. So unless each cut comes with either a revenue generator or a budget cut, the deficit will continue to grow. During the last major round of tax cuts in 2001 the government was sitting on budget surpluses. Not now.

Why would the Democrats go along with any tax deal now? Hopefully, it has sunk in that an automatic tax increase that will reach down into the middle and low-income levels is not the way to start the new year.

In the 112th Congress, look for considerable pressure to tackle tax issues under the disguise of tax reform. There are just too many expired and expiring tax relief provisions and no simple ways to deal with the revenue losses of extending that tax relief. If you favor meaningful deficit reduction, there are not many deficit reduction experts who think you can accomplish real deficit reduction without an increase in tax revenues.

And a Few Other Relevant Items

Travel Promotion Act and Corporation for Travel Promotion: The recently named 11-member board of directors for the Corporation for Travel Promotion has now had two meetings and is beginning to formulate its strategic and operational plans of action and launch the recruitment process for the first CTP executive director. It also met Oct. 26 in Las Vegas with the Commerce Department Travel and Tourism Advisory Board to coordinate their missions and strategies.

The CTP, the board members of which are all from the travel and tourism industry, was established by the Travel Promotion Act enacted by Congress in March. The Department of Homeland Security has established the funding mechanism that, combined with private sector contributions, will create a marketing program of up to $200 million per year to attract millions of new visitors to the United States.

ARVC strongly supported enactment of the TPA and will follow closely the work of the CTP to ensure the interests of small businesses and rural areas are given full consideration.

Federal Highway Reauthorization, Infrastructure and Stimulus: The conditions of the nation’s highways, bridges, tunnels and all related infrastructure continue to be among ARVC’s top federal priorities. RVs don’t move unless there are quality, safe and uncongested roads to travel on.

At the request of the American Association of State Highway and Transportation Officials (AASHTO), ARVC is organizing a meeting of tourism industry representatives to discuss the future of reauthorization of the Federal Highway program, what it all means for tourism and how tourism can play a meaningful role.

With the election of a significant number of anti-tax-and-spend members of Congress, speculation and anticipation continue about what the impact will be on the highway program. Meanwhile, the Administration appears inadvertently to be sending mixed signals about what realistically lies ahead for transportation. The entire scenario is increasingly baffling to the transportation industry, which craves a return to stability and predictability in the nation’s major funding programs for highways, transit, aviation, ports and other infrastructure.

Right now, there appears to be no serious prospect of movement on a major transportation bill for the rest of this year. Instead, Congress, in the lame duck session is only expected to pass a four to six month extension of the previous highway program known as SAFETEA-LU.

Top staffers on Capitol Hill directly involved in transportation funding issues say Congress will have a political window of opportunity to address transportation needs in the first six to eight months of 2011. After that, they say, the partisan divide inevitably will sharpen with the onrush of the 2012 presidential campaign.

But next year’s “window of opportunity” coincides with the seating of what will be a much more conservative Congress, less willing to increase taxes or approve new multi-billion dollar spending bills for whatever purpose.

New Administration Great Outdoors Initiative: With the completion of “Listening Sessions” in more than a score of locations around the nation, administration staff members have been analyzing the results of those sessions and were expected to produce a report to the President on a 21st Century Great Outdoors Strategy by mid-November that will help shape future Federal public land budget priorities.

Among the issues thought likely to be considered for this new initiative are:

  • Full funding for the Land and Water Conservation Fund.
  • Revitalization of the national park system in time for its 100th Anniversary in 2016.
  • Designation of new national monuments on Bureau of Land Management land.
  • Passage of an omnibus public lands and parks bill.
  • Increasing interagency collaboration on tourism and recreation.
  • Fostering greater involvement of children and youth in outdoor recreation.
  • Promoting the value of outdoor activities in issues of mental and physical well-being.

ARVC continues to support development of the Great Outdoors Initiative while working to ensure that it does not have an adverse impact on small businesses competing with programs and services provided on the federal lands.


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