The horse industry can be affected by all of this.
While a deal was reached on the debt ceiling that included steps toward debt reduction, Congress and the President face much more work before the country's fiscal house is in order. Everyone acknowledges this is just "phase one." There is no reason to think that the subsequent phases will be any easier than the debt ceiling negotiations. Indeed the actual tough decisions on spending cuts, tax reform, debt reduction and balanced budgets are still ahead.
Under the legislation, the debt limit can be raised by as much as $2.4 trillion through 2013, which should be enough to avoid another debt ceiling battle until after next year's elections. The deal provides for $1 trillion in cuts over ten years to defense and non-defense spending and requires Congress to at least vote on a balanced-budget amendment.
The new law sets up a twelve person Joint Select Committee on Deficit Reduction, known as the "super committee," to be named by House and Senate leaders in two weeks. It will include six democrats and six republicans, three each from the House and Senate. The committee will be asked to find additional ways to offset $1.2 trillion in spending over ten years and to make legislative recommendations to improve the county's short- and long-term fiscal health. The committee must release its legislative recommendations to Congress by Thanksgiving. That plan will be subject to an "up-or-down" vote by the House and Senate, meaning no possible amendments.
If the committee cannot reach consensus on $1.2 trillion in spending cuts, or if Congress cannot pass the committees plan by December 23, across-the-board cuts of $1.2 trillion over ten years, beginning in 2013, to federal agency budgets will kick-in automatically. They will be divided evenly between defense and domestic programs, including Medicare. The intent is to make these automatic cuts so distasteful that the committee will agree to a plan and Congress will pass it.
There are no tax increases in the package, but it is expected that the super committee will look at tax reform proposals that would close various "loopholes" and provide additional revenue. It is also expected that the democrats will push for an end to the Bush-era tax cuts set to expire at the end of 2012. So tax increases are likely in the next two years even if not specifically proposed.
Once the super committee is appointed, it will meet over the next three months to try to hammer out a plan to improve the county's short- and long-term fiscal health. The process to be followed, the committee's scope,whether it will select a chair or chairs, ask for recommendations from Congressional committees, hold public hearings or meetings, call upon "experts," etc. has yet to be determined. Indeed whether recommendations regarding an increase in tax rates or just "tax reform" are on the table is unclear. Suffice it to say the committee will indeed be important and powerful. Whatever the process, any final recommendations must have the support of at least seven of the twelve members in order to be sent to Congress for a vote.
The horse industry can be affected by all of this. Obviously tax increases or closing so-called "tax loopholes" can affect it. The 2008 change in the depreciation schedule for race horses from seven to three years has already been demo gauged as a break for "rich race horse owners," even though it simply changed the depreciation period to allow owners to recover the cost of the horse over the real period it races and involves a very small amount of revenue.
Any cuts to the budgets of federal agencies, such as theDepartment of Agriculture, could affect the health of horses and the ability of the horse industry to move horses interstate and internationally for sale, breeding, racing, competition and recreation under federal protections. Cuts in federal research involving equine diseases would affect horse health. Reductions in the funding of the Department of Interior, Forest Service and other federal agencies that maintain federal trails and national parks could affect the ability of riders to enjoy trail riding. Tax reform, cuts to federal agencies, and the elimination of federal programs face all industries, not just the horse industry. This is what will make this process so difficult. The horse industry must ensure that any cuts or tax changes do not unfairly affect it.
The next fiscal bump on the horizon is the expiration of the Continuing resolution that has kept the federal government operating. Congress has been unable to pass the various appropriations bills for each federal agency for several years . Last April Congress passed a continuing resolution to keep the government operating at current levels through September 30, 2011. The deliberations over that extension almost led to a government shutdown. Congress and the White House went to the brink then before agreeing to various cuts to keep the government operating.
September 30 is just around the corner. Congress may simply extend the continuing resolution for several months to allow the super committee to do its work. Or there may be another "food fight. " Some are hoping that having just concluded a bitter partisan battle, Washington will not have the stomach to do it again so soon, particularly with "phase one" of the Budget Control Act already in place. But only time will tell.
Clearly the next phases of the federal effort to put the country's fiscal house in order will be critical. The American Horse Council will be working to ensure that whatever changes are made will be fair and equitable and will not put the horse industry at a competitive disadvantage.
American Horse Council 1616 H Street NW · Washington, DC 20006
Phone (202) 296-4031 · Fax (202) 296-1970 · Web Address www.horsecouncil.org