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Michael Erlandson, Moderator Jeff DeBoer James Dennis Lori Ziebart

The National Association of Business Political Action Committees 2012 NABPAC POST-ELECTION CONFERENCE. Lame Duck and Beyond. Michael Erlandson, Moderator Jeff DeBoer James Dennis Lori Ziebart. Discussion. Election Results Deficits and the Fiscal Cliff

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Michael Erlandson, Moderator Jeff DeBoer James Dennis Lori Ziebart

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  1. The National Association of Business Political Action Committees2012 NABPAC POST-ELECTION CONFERENCE Lame Duck and Beyond Michael Erlandson, Moderator Jeff DeBoer James Dennis Lori Ziebart

  2. Discussion • Election Results • Deficits and the Fiscal Cliff • Key Policy Issues in the Lame Duck & Beyond • Taxes • Real Estate • Energy and Environment • What It All Means in the Real World THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 2

  3. Impact of Elections • Republican/Democratic ratios not dramatically changed • But some attitudes may have changed • Sets up opportunity for compromise in Lame Duck • Aisle crossing will still be necessary to get legislation to the President’s desk • Next Congress not likely to see sweeping reforms – more maneuvering around the edges • Compromise critical to moving legislation in new Congress THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 3

  4. Deficit Overview • Projected $1.1 trillion deficit for FY 2012 – 4th yr over $1 trillion • 1986 – 5% deficit as a percentage of GDP • 2012 – 7.3% deficit as a percentage of GDP (down from 8.6% in 2011) • National debt is $15.98 trillion +/- $1bn • Interest on debt likely to rise from $197bn in 2010 to $778 bn in 2020 • As percentage of GDP - net interest outlays expected to more than double during that period from 1.4% to 3.4% THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 4

  5. Fiscal Cliff & Sequester • Failure of Deficit Commission left us with the Sequester • $110bn automatic cut in defense & discretionary spending • Congress can: • Do nothing – let Sequester take effect • Delay effective date of Sequester • Agree to a comprehensive compromise • Agree to a smaller compromise • Failure to act likely pushes economy back into recession • Business is bracing for the worst THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 5

  6. Other Issues in Lame Duck Session • Bush Tax Cuts • Cuts passed in 2001 and 2003 slated to expire at end of year • AMT Patch • Payroll Tax Relief Extension • Extenders • Various individual and corporate tax provisions have either expired or will expire at the end of the year • Farm Bill • Current 5 year bill has expired • Debt Limit Increase • Debt limit reached in January or February • Without action government will shut down THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 6

  7. Tax Reform in New Congress • Growing consensus that reduction in corporate rate necessary to remain competitive • Several bipartisan deficit reduction plans envision tax reform • Ryan budget and Camp proposal envision reducing top individual and corporate rates to 25% • May be comprehensive or piecemeal • What may be on the table: • Corporate and individual tax rates • Carbon tax • Increases in dividend, capital gains and state tax rates • Repeal/modification of tax credits and deductions, including: • Home mortgage interest deduction • Charitable deduction • Energy tax credits • Accelerated depreciation THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 7

  8. Real Estate Industry • Credit and Capital Concerns • Mounting commercial real estate mortgage maturities • Dodd Frank and Basel III raise concerns about real estate lending • GSE reform of Fannie and Freddie • Terrorism Risk Insurance Program expires at end of 2014 • Tax Issues • Capital gains and Carried interest • Partnership taxation • Interest deductibility • Depreciation • Environmental Matters • Building Energy Retrofit incentives and mandates • EPA LEAD and stormwater runoff regulations THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 8

  9. Energy & Environment • EPA • Many regulatory initiatives problematic for industry, particularly coal – continued plant retirements • Stand off among EPA, industry, states, environmental groups, members of Congress • Continued litigation and legislation to stop/modify EPA initiatives • Some companies may look for compromise • Other Issues: • Keystone Pipeline approval • Domestic oil and gas production and regulation • Export of natural gas • Challenges around continued renewable energy development • Push for increased energy efficiency • Infrastructure development THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 9

  10. Industry Reaction QUESTIONS THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 10

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