By Greg Brown, NAA Legislative Affairs

At this writing, Congress is preparing to vote to increase the nation’s debt limit and set in motion a plan to reduce the deficit by $2.4 trillion over the next 10 years to avoid a default by the United States.  Only the day before, this agreement still seemed out of reach with members on both sides of the aisle balking on some of the remaining fine points.  Ultimately, all was resolved.  So, economic catastrophe has been avoided – for the moment – as policymakers fled the tension, turmoil and high temperatures of Washington, D.C., for the August recess.  That leaves those of us in or around the business of politics and policymaking to consider the potential ramifications of this agreement.

The President had a number of goals throughout this process.  First and foremost, he could not allow a default and economic calamity on his watch.  However, he also needed to ensure that Social Security, Medicare and Medicaid were protected and believed that revenue increases (taxes) needed to be part of whatever final deal emerged in order to reduce the deficit. In the end, he achieved his first two goals and settled for the potential for revenue increases through the newly-created “Super Committee,” comprised of members of Congress.  It must come up with $1 trillion in additional budget savings between now and the end of the year. 

The agreement is not being taken well by liberals in the Democratic Party.  The absence of specific, identified revenue increases is being viewed as a capitulation by the President, despite the fact that these have been effectively off the table for some time.  He gets some points for protecting Social Security and Medicare, but still has a lot of work to do to mollify the left wing of his party.  On the upside, supporting a deal that cuts government spending in a significant way should gain more ground with independents for the President, whom he will need on Election Day.

Like the President, House Speaker John Boehner also had to balance a number of objectives.  He had to prevent a government default, which would surely result in a lot of blame being laid at the feet of the GOP, hold the line on any and all tax increases, and secure significant, immediate cuts in federal spending.  Finally, he had to push for a major restructuring of Medicare and Medicaid.  He succeeded on the first two items, made significant progress on the third (though only a down payment in the eyes of conservatives), and had to settle for a symbolic victory for the last goal with Medicare cuts restricted to providers. 

There will be grumbling among conservatives in the House over some aspects of the deal and the Tea Party community will continue to press for much deeper budget cuts.  However, for the moment, many in the Republican caucus are satisfied with taking what they can get and living to fight another day.  The accolades for the Speaker’s leadership on this effort are flowing as many in the House GOP declare victory at staving off tax increases and enacting some of the biggest federal budget cuts in the history of the republic.  

The celebration could be short-lived, though, depending on what recommendations come out of the Super Committee of House/Senate negotiators for the next round of deficit reduction.   Tea Party activists also are not likely to go quietly into that good night because of this agreement.  Republican candidates in 2012 will have to continue their tack to the right on fiscal issues to avoid primary challenges.

All-in-all, the nation won by avoiding a default.  According to economists of every stripe, a default would have been devastating to the health of our economy and that of the world overall, so we have bought ourselves some time in that regard.  However, confidence in the United States political system – especially as it relates to critical economic matters – has definitely been weakened, and the threat of some downgrade of our debt by one or more of the rating agencies still looms.  If that occurs, interest rates will increase, which will impact every American’s borrowing costs.  This could provide some additional motivation for policymakers to enact not only additional budget cuts or revenue increases, but structural changes to the system to bring the deficit and debt under control.  Time will tell. 

Switching gears for a moment, I’d like to briefly remind you of an effort currently underway in your Government Affairs Department at NAA to be more proactive in our identification of future challenges for the apartment industry.  Government affairs professionals in general tend to get stuck on the issue of the moment versus longer-term “emerging” issues.  Identifying these problems – or opportunities for that matter – and preparing for them can make the difference between absorbing a bump in the road and enabling a complete disaster (just ask anyone in the single-family housing business).  

With the above in mind, I want to know from practitioners such as you about the next big “thing” coming at the apartment industry.  Send me an e-mail – greg@naahq.org – with your thoughts on what our biggest challenges will be and why.  Try to think in terms of 3-5 years away.  Your submissions will be added to the agenda of an upcoming NAA Legislative Committee meeting for discussion and potential addition to our list of advocacy priorities.  I will share your ideas in my next column.  Thank you in advance for serving a critical need for our industry.  Have a great month!