A majority of members of a deficit-reduction panel today endorsed the package of spending cuts and revenue increases aimed at reducing the federal deficit, but not enough to command immediate action by Congress.
The proposal, which calls for eliminating business tax expenditures including the tax exemption for credit unions, was supported by 11 of the 18 commission members. Congressional leaders had promised to bring up the proposal for a vote if it received at least 14 votes. The National Commission on Fiscal Responsibility is made up of members appointed by President Obama and Democratic and Republican leaders in Congress.
Even if Congress doesn't take up the commission's package in full, it could use it as a basis for deficit-reduction efforts next year. Republicans who are set to take control of the House and control more seats in the Senate have said cutting the deficit is a top priority.
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The panel's report doesn't mention the credit union tax exemption by name but the report released today describes these expenditures as "another name for spending through the tax code."
NAFCU President/CEO Fred Becker reiterated his objection to the elimination of credit union's tax-exempt status in a letter sent yesterday to commission cochairmen Erskine Bowles and Alan Simpson.
Becker wrote that his association is "is greatly disappointed that the concerns we expressed on behalf of our members throughout the commission process did not receive additional consideration. As you may recall, credit unions must operate on a not-for-profit basis, organize without capital stock, and operate for mutual purposes in order to receive a tax exemption. While banks and others claim there is "competition" from credit unions, they continue to record profits and often times fail credit worthy consumers who turn to their local credit union as a viable financial service alternative."
The commission's recommendations, which include cuts in the Pentagon budget, raising the retirement age and modifying the mortgage interest deduction, are aimed at cutting the deficit by $4 trillion by the end of the decade.
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