Roundtable Weekly Newsletter On Election, Recovery and Transportation

  • ELECTIONS 2012 & TAX POLICY
    As Tax Day Looms, Democrats Prepare for High-Stakes Senate Vote on “Buffett Rule”; 13 GOP Senators Targeted
  • JOBS & ECONOMIC RECOVERY
    Amid Disappointing Job Creation Data, Key Fed Officials Endorse Plans for Ultra-Low Interest Rates into 2014; Hints at Additional Policy Action to Bolster Economic Recovery (But Not “QE3”)
  • TRANSPORTATION INFRASTRUCTURE
    Council on Foreign Relations Memo Suggests Modest, Incremental Policy Action on Transportation Infrastructure as Best Option in Today’s Highly Polarized Political Environment  

ELECTIONS 2012 & TAX POLICY

As Tax Day Looms, Democrats Prepare for High-Stakes Senate Vote on “Buffett Rule”; 13 GOP Senators Targeted  

As President Obama and Senate Democrats this week launched their offensive in support of the so-called “Buffett Rule” — and sought to link it directly to GOP presidential candidate Mitt Romney in advance of next week’s Senate vote on the minimum millionaires’ tax — congressional Republicans fired back that the measure was a show-vote and a distraction from job creation. As Senate GOP leader Mitch McConnell said Wednesday, the bill “won’t take a single person off the unemployment line” (Politico, April 11). 

Capitol clouds 

In advance of next week’s Senate vote on the minimum millionaires’ tax — congressional Republicans said the measure was a show-vote and a distraction from job creation.   

As a Washington Post blogger explained Wednesday, “Republicans are working hard to separate the issue of tax fairness (where Dems are on offense) from the economy (where Dems may be on the defensive). Obama needs to convincingly sell efforts to combat inequality and tax unfairness as not just a matter of basic morality, but as central to spurring long term investment in the economy, and with it, economic growth and shared prosperity.” 

With so much at stake in Monday’s Senate vote on the “The Paying a Fair Share Act of 2012” — and given the chamber’s 60-vote threshold for passage of legislation — the White House is reportedly planning to target GOP Senators in 13 states with a media blitz of op-eds and public comments by Administration officials (The Wall Street Journal, April 10).

A new online ad launched by the Democratic Senatorial Campaign Committee (DSCC) asks, “Does Mitt Need a Tax Cut?” and directs Facebook supporters to a petition urging support of Obama’s push for a 30 percent minimum tax on millionaires.

As Senate Democrats pushed the Buffett Rule hard in their own races, Vice President Biden this week took aim at what the coined the “Romney rule,” saying it’s about “the very wealthy . . . keep[ing] the tax cuts and loopholes they have and get[ting] an additional, new tax cut every year that is worth more than what the average middle-class family makes in an entire year” (Roll Call, April 12).  

Halperin 

At the 2012 Spring Roundtable Meeting, TIME editor-at-large and senor political analyst Mark Halperin will share his insights on the 2012 elections.

“Rather than the $47 billion the Buffett Rule would raise” — a response to GOP criticisms that the proposal would do little to shrink federal budget deficits — “Biden pitched the choice as a $2 trillion one — $1 trillion to keep the existing Bush-era tax cuts for the wealthy and another $1 trillion in new tax cuts he said Romney is proposing for the top 1 percent,” Roll Call wrote. 

With major tax policy decisions looming at year-end — in particular the fate of the 2001-03 Bush tax cuts — and election-year rhetoric heating up, The Roundtable urges a more civil and constructive tone in our political discourse on issues of tax “fairness” and taxpayer obligation. Criticizing or penalizing Americans who work hard, create jobs and enjoy the attendant successes is deeply damaging to our culture, and must be avoided. What’s needed instead is for policies that reinforce our cultural values of hard work, aspiration and success.

At a special policy briefing on Tuesday — the first of the two-day Spring 2012 Roundtable Meeting — TIME editor-at-large and senor political analyst Mark Halperin will share his insights on the 2012 elections and their sweeping implications for a range of policy issues likely to affect commercial real estate and the economy for years to come.  

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JOBS & ECONOMIC RECOVERY

Amid Disappointing Job Creation Data, Key Fed Officials Endorse Plans for Ultra-Low Interest Rates into 2014; Hints at Additional Policy Action to Bolster Economic Recovery (But Not “QE3”)  

On the heels of disappointing job creation numbers for the month of March, the Labor Department yesterday said first-time state unemployment claims rose unexpectedly by 13,000 last week — the highest level since January 28 (Reuters, April 12). Instead of falling to 355,000, as economists expected, the number of claims increased to a seasonally adjusted level of 380,000.

Beige Book 

The Fed’s latest Beige Book shows an economy expanding “at a modest to moderate pace.” 

Still, the number of first-time applications for unemployment assistance and the four-week moving average for new claims (considered a better measure of labor market trends) both stayed below the widely watched threshold of 400,000.

Separately, the Fed’s latest Beige Book, released yesterday, showed an economy expanding “at a modest to moderate pace” from mid- February through late March, as manufacturing, hiring and retail sales showed signs of strength in the face of higher fuel prices (Bloomberg, April 12).

Fed Vice Chair Janet Yellen and New York Fed President William Dudley this week endorsed the central bank’s plan to keep short-term interest rate near zero until late 2014, with Yellen hinting at the possibility of additional policy action if the recovery begins to falter again.

“I consider a highly accommodative policy stance to be appropriate in present circumstances,” Yellen said in a speech Wednesday night. A day later, Dudley echoed her comments, saying, “I haven’t seen any set of information that should suggest to me we should change that view.”  

  Mallaby 

Financial writer/author Sebastian Mallaby will discuss a range of global economic issues at The Roundtable’s 2012 Spring Meeting next week.

Despite the recent downturn in job creation and persistently high unemployment, Fed officials played down the likelihood of another round of so-called “quantitative easing” — the central bank’s bond-buying program. As The Wall Street Journal reported yesterday, investors have been reading into Fed officials’ remarks closely for clues on how they might vote when the Fed’s policy-setting body, the Federal Open Market Committee (FOMC), meets on April 24-25. At that time, the Fed is expected to update its forecasts for growth, unemployment, inflation and interest rates.

Real estate CEOs and trade association leaders attending next week’s Spring 2012 Roundtable Meeting will have an opportunity for dialogue with financial writer/author Sebastian Mallaby on a range of related issues, such as the global economic outlook, expectations for major tax policy decisions during the post-election “lame-duck” session, the role of hedge funds in the financial system, and prospects for stabilization within Greece and the Euro zone. The former Washington Post editorial board member and former bureau chief for the Economist is now with the Council on Foreign Relations. He is the author of the 2010 book, More Money Than God: Hedge Funds and the Making of a New Elite.  

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TRANSPORTATION INFRASTRUCTURE

Council on Foreign Relations Memo Suggests Modest, Incremental Policy Action on Transportation Infrastructure as Best Option in Today’s Highly Polarized Political Environment  

The Council on Foreign Relations’ Renewing America initiative on Wednesday released a call to action on America’s crumbling transportation infrastructure, urging Washington to go beyond the massive highway funding bills that have been stalled for years — Congress recently passed its 9th temporary funding extension since the last comprehensive measure expired in 2009 — by taking a series of smaller policy steps, in some cases that can be achieved without congressional approval.

  highway road transportation cars - crop 

Congress recently passed its 9th temporary transportation funding extension since the last comprehensive measure expired in 2009

The author of the April 11 policy memo, NewBuild Strategies LLC President Scott Thomasson, urged policymakers to focus on “two politically viable” approaches:

 Give states flexibility to pursue alternative financing sources — e.g., public-private partnerships, tolling and user fees, and low-cost borrowing through innovative credit and bond programs

Improve federal financing programs and streamline regulatory approvals to move billions of dollars for planned investments into construction (e.g., by eliminating time-consuming duplicate reviews for transportation infrastructure projects and, instead, adopting the “one-stop” review used for natural gas pipelines)

According to the document, titled Encouraging U.S. Infrastructure Investment, these steps can achieved through modest legislation that is less likely to get bogged down in major partisan conflicts, or by circumventing Congress entirely with executive branch action (using existing legal authority).

“In cases where modest reforms can make more financing solutions possible, good ideas should not be held hostage to ‘grand bargains’ on big legislation like the highway bill or the failed 2010 energy bill,” he asserted. Instead, “Congress should take up smaller proposals that stand a chance of passing both houses this year—incremental steps that can unlock billions of dollars in additional investments without large federal costs.”  

Ray LaHood 

Secretary of Transportation Ray LaHood will be part of the Spring Roundtable 2012 Meeting in Washington — to discuss urgent transportation infrastructure challenges facing the nation.

Although there are plenty of good ideas in this area, says the memo — citing proposals for a national infrastructure bank that would leverage federal funds and encourage public-private partnerships — and although there is considerable common ground between the parties, many good ideas are politically dependent on passage of a highway bill, something U.S. Transportation Secretary Ray LaHood and others do not expect to happen before the November elections.

LaHood will be joining Roundtable members this coming week — as part of the Spring Roundtable 2012 Meeting in Washington — to discuss the urgency of transportation infrastructure challenges facing the nation — along with potential solutions and opportunities.

The Roundtable supports the idea of a national infrastructure bank and views adequate, intermodal transportation infrastructure as critical to the health of local and regional economies as well as the national economy. Along with private-sector groups such as the U.S. Chamber of Commerce and Transportation for America (T4A), The Roundtable supported Senate transportation legislation (“MAP-21”, S. 1813) whose two-year funding horizon would have made it easier for real estate developers and transportation planners to coordinate on critical surface transportation projects.

Unfortunately, after several failed attempts to attach the Senate bill to a last-minute House bill providing only 90 days of transportation funding (and with the clock ticking down toward expiration of federal highway funding on March 31), the Senate ultimately accepted the House bill and sent it to the White House for Obama’s signature. The latest stopgap measure expires June 30, setting up the prospect for more partisan wrangling over this issue in coming weeks and months.  

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Source:  The Real Estate Roundtable

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