They’ve given money and done other things necessary for relationship building with members of Congress’ new deficit cutting panel.
However, credit unions and their trade associations aren’t taking anything for granted when the House-Senate panel gets down to work next month.
For example, committee member Sen. Max Baucus (D-Mont.) has been supportive of the credit union tax exemption and other industry positions such as opposing the Durbin amendment on interchange.
But Steve Grooms, the president/CEO of 1st Liberty FCU in Great Falls, Mont., won’t leave anything to chance.
He plans to reiterate the importance of keeping the tax exemption during talks with Baucus and his staff during a meeting when Grooms goes to Washington next month as part of NAFCU’s Congressional Caucus.
“He’s been on our side, but we know that there are different factors that go into play when they are considering a bigger package than if they were considering the tax-exemption issue on its own. But I am hopeful that as he and his colleagues look at the relatively small dollars they would save versus the tradeoff in terms of costs to members, we will keep our exemption,” said Grooms, whose credit union has assets of $140 million.
The House-Senate panel, made up of an equal number of Democrats and Republicans from both chambers, has until mid-November to come up with recommendations for cutting the deficit. The proposal must be voted on with an up or down vote and cannot be amended. If the panel can’t agree on proposals, there are cuts that will automatically take effect.
It remains to be seen if the panel will venture into tax reform–including discussing tax expenditures such as the credit union exemption–as part of its work.
Baucus’ House counterpart, Ways and Means Committee Chairman Dave Camp (R-Mich.), is also on the panel. Camp is a strong supporter of the credit union tax exemption and extolled its virtues during a 2005 committee hearing on the subject. CUNA’s PAC gave Camp $10,000 for the 2010 campaign and has so far given him $5,000 for next year’s race. NAFCU’s PAC gave him $1,000 for last year’s campaign.
CUNA Senior Vice President John Magill said while his group has good relationships with all the committee members, “we are always concerned whenever there is the potential for taxes to be on the table.”
NAFCU Vice President Brad Thaler said his concern is “not that they will single us out, but if the panel makes changes to expenditures, we could well be swept in with the other changes.”
The NCUA can’t lobby Congress, but agency spokesman Todd Harper said the agency would closely follow the House-Senate committee’s deliberations. He noted that NCUA Chairman Debbie Matz has expressed concern that if CUs lose tax-exempt status, it would fundamentally alter their business model.
“At this point, Congress has not put forward any legislative proposal to alter the treatment of credit unions under the tax code. The agency would, however, very carefully examine any congressional proposal that alters this arrangement,” Harper wrote in an email.
Another member of the panel is Financial Services Committee Member Sen. Jeb Hensarling (R-Texas). Texas Credit Union League President Richard Ensweiler, a long-time friend and supporter of Hensarling, said the congressman has had a mixed record on credit unions. He supports the tax exemption but has opposed efforts to raise the cap on member business lending.
Ensweiler said Hensarling, a co-chairman of House-Senate panel, will work to ensure that taxes aren’t increased because that is a core part of his philosophy. “He’s an ultra, ultra conservative on economics. When he criticizes the Republican Party it is that the party doesn’t go far enough,” Ensweiler said.