Could deficit talks ensnare credit unions
by. Henry Meier
The good news this morning is that there has been a notable shift in tone in the debt ceiling, government shutdown debate with Republicans talking more about the need to reign in government spending by, among other things, negotiating entitlement reform and tax code changes than the need to “defund” Obamacare, even if it means destroying the nation’s full faith and credit. This is both good news and bad news for credit unions.
The most tangible sign of this shift has been the reemergence of House Budget Committee Chairman Paul Ryan, who has been harder to find in recent days than Waldo. In an Op-Ed in yesterday’s Wall Street Journal, and in subsequent discussions with his House colleagues, Ryan outlined a plan whereby Congress would pass a debt ceiling extension and continuing resolution to get the government running again, but the ultimate scope and length of the extension would be tied to progress in ensuing budget talks.
And what type of reforms is he talking about? Well, tax code changes would definitely be on the table. As he explained in his Journal Op-Ed piece ”Rep. Dave Camp (Republican, Mich) and Senator Max Baucus (Democrat, Mont) have been working for more than a year now on a bi-partisan plan to reform the tax code. They agree on the fundamental principles: broaden the tax base, lower the rates, and simplify the code. The President himself has argued for just such an approach to corporate taxes. So we should discuss how Congress should take up the Camp-Baucus plan when it is ready.”
This is the bad news part of the story. When fundamental tax reform is on the table, that means the credit union tax exemption is potentially at risk. I still think given the schisms within the Republican Party such a “grand bargain” minus health care reform is about as likely as Miley Cyrus staying out of the news for a day or two. However, re-emergence of the idea means that credit unions should be ready to step up their Don’t Tax Campaigns another notch in the not so distant future. Tax reform was never going to get through a normal legislative process. But if it is part of a high-pressure negotiation, then there’s always a possibility, no matter how remote that Congress will get something accomplished.
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