Fiscal Cliff Diving: When and Will It Happen?

Hon. Daniel A. Mica, Principal, The DMA Groupby: Hon. Daniel A. Mica, Principal, The DMA Group

It is Monday, September 10, 2012. Driving toward Capitol Hill, the voices being beamed to my car via satellite are speculating and deliberating about what Congress can, and will, get done upon their return from recess later this afternoon. Some pundits hypothesize that the dozen or so outstanding spending bills will be tackled or, possibly, a farm bill drafted on the heels of this summer’s drought. Important issues such as postal reform, the violence against women’s act and cyber security are fodder for discussion but will likely only see legislative traction if the elections and presidential debates heighten their value from a talking piece to an actual vote.

Of course even addressing these issues would still avoid dealing with the looming “fiscal cliff”, representing mandatory spending cuts and year end expiration of bush tax cuts. We hear from the defense department and their many contractors about what the cuts would do to their mission and business. We hear from citizens around the country about what the expiring tax cuts would do to their personal bottom lines. From business, Wall Street, consumers and the media there is speculation about what could happen if we are allowed to fall off the fiscal cliff.

So how does this situation appear from inside the looking glass? We see a small portion of how the deliberations and the politics of the situation work by listening closely to the discourse between our presidential candidates as well as the public statements from both the republican and democratic leadership on the hill.  Both Senate Majority Whip Dick Durbin (D-Ill.) and Senate Minority Leader Mitch McConnell (R-Ky.) have been quoted saying that if there is a change in the White House, we can expect that little will get done before the inauguration.  Today, House Speaker John Boehner (R-Ohio) echoed these sentiments stating he does not believe Congress will reach a budget deal by the end of the year.

How about the rank and file Members of Congress whose votes are being whipped daily when they are not being strongly reminded of the party mandate on each issue. What will it look like in the trenches when the fiscal cliff is truly looming in the upcoming post-election lame duck session? Having been in these situations myself on several occasions, allow me to outline a few scenarios.

  • A) If President Obama retains the White House and the Democrats take control of the Congress, there would be a push to craft a solution to the economic conundrum before the December 31st deadline.
  • B) If Governor Romney is elected and the Republicans maintain control over Congress, it is very likely that the issue will be stalled until the Congress is in session in the new year.
  • C) There is discussion on both sides that no matter what happens in the election, there just simply is not enough time and energy in the lame duck to handle these issues. Nor is politically advantageous in the longer term. So the idea that there will be something along the lines of a six-month extension into 2013 becomes increasingly likely.

An extension package will likely be bound by very stringent rules regarding what can be attached or acceptable for consideration as part and parcel. However, there are several financial services/stimulus related initiatives included in the expiring laws. Several of these are natural complements to the credit union MBL legislation and need to be watched very closely. If there is any possibility to interject MBL legislation into the package we must be poised to do so.

Regardless of whether true action is taken or the can is just kicked down the road, the package will have to be developed and voted on. Despite rules that may restrict what can be included there may still be an opportunity for Member Business Lending (MBL) to be included in a deal. This could happen at several steps in the legislative process. For example, it could be included at the committee level, or it could be included in conference. Often opportunities for this type of procedural maneuver come at the last minute. This is how our MBL cap was implemented in the first place, so it would be fitting for us to eliminate it in such a manner.

Taking a dive off the fiscal cliff will remain a topic of speculation, but I can guarantee this, no matter when or how the legislation is passed or punted, there will be changes to the tax laws and the credit union initiatives could be impacted. Stay tuned!

About Daniel A. Mica, LLC (The DMA Group)
Dan Mica, former head of the Credit Union National Association (CUNA), established The DMA Group as a means to combine a myriad of experience into a one-stop consultancy.  Elected in 1978 to represent Florida’s 11th district in the U.S. House of Representatives, Dan Mica served five terms before beginning what would become more than two decades of work in the world of non-profits and association management.  

The DMA Group is a full-service consulting firm, providing the highest level of integrity and service through established practices and decades of experience.

Daniel Mica

Daniel Mica

Dan Mica, former head of the Credit Union National Association (CUNA), established The DMA Group as a means to combine a myriad of experience into a one-stop consultancy. Elected in ... Web: www.dmagroupdc.com Details