COMMENTARY: Industry could be casualty of budget battle - Trade Only Today

COMMENTARY: Industry could be casualty of budget battle

Author:
Publish date:

Most mariners are familiar with the storyline of "The Perfect Storm." It’s a tale about a rare combination of circumstances that come together at one place, at one time, to devastating effect. The same could hold true for the boating industry in the weeks and months to come if the budget battle buffeting Congress spirals out of control.

Although much of the national budget debate revolves around threatened cuts to Social Security, Medicare and Medicaid and whether those making more than $250,000 a year will face a tax increase, any legislative threats to boating will most likely play out behind the scenes, often behind closed doors, between now and the fall of 2012, when Congress finally departs to campaign for the next elections. The writing could be on the wall as early as Aug. 2, when the federal debt ceiling is reached.

To put what may be behind Door No. 1 in context, consider the following recent developments:

• Facing a trillion-dollar budget deficit, House Republicans on the Agriculture Appropriations subcommittee want to slash the budget for the federal agency responsible for the nation’s food safety by 11.5 percent in order to save $285 million.

• Another House Appropriations subcommittee is threatening to halt the funding of a new headquarters complex for the Department of Homeland Security. The Coast Guard (currently housed at Buzzard’s Point) is a part of Homeland Security, and if the funding is cut all that will be left is a nine-story hole on the grounds of a former mental institution.

• Some air traffic controllers are forced to moonlight as waiters at a Washington Dulles Airport Applebee’s restaurant because of budget cuts enacted during the Bush administration.

• With no end in sight in Afghanistan and Iraq, longtime Defense Secretary Robert Gates is departing just as Congress is considering major cuts in military pay and benefits.

• In a special late May election in upstate New York’s 26th Congressional District, a Democrat was elected for only the fourth time in 150 years after the Republican candidate's embrace of a plan to change Medicare's payment options.

What do these developments have in common? Many federal programs and benefits once considered sacred cows are facing real scrutiny for the first time in years. Political calculations are being made, and who wins and who loses will depend on the effectiveness of the legislative strategies and capabilities developed by those at risk.

Now I’m not one to cry wolf, but the money to begin closing the budget deficit has to come from somewhere. Sometime in the near future the federal government will stop printing money and start cutting programs, and whether they call it a user fee, a tax or a revenue enhancement, those industries that have not been especially active could suffer the consequences.

To guard against this oncoming storm, you’ve got to throw out everything you learned in high school or college about how a bill becomes law.

The fact is that individual bills don’t become law much anymore. Although thousands of bills are introduced in each Congress, only a handful are signed into law. During the last 15 years, Congress has adopted a nasty habit of passing omnibus, thousand-page-long bills just before time runs out in a congressional session.

What’s wrong with this seemingly efficient method of getting legislation through Congress? Not only are these bills nearly impossible to read and understand in the short amount of time allotted, but also the very nature of these bills makes it very difficult to find out who put in a new tax or fee or cut a program’s budget. Because these measures are easily buried within massive bills, there is little downside or risk. Legislators can’t get blamed for something if it doesn’t have their name on it.

Besides, by the time the industry affected by the new law discovers what’s in the omnibus bill and begins to howl, legislators can always say that they had to vote for the legislation because it was the only chance they had to solve the nation’s budget crisis.

There’s an old adage in Washington that compares the making of legislation to the making of sausage. The thought here is that you really don’t want to know what’s put through the grinder.

But you very much do need to know what’s going into the grinder because if you don’t, you may well end up with stuff that’s toxic. The infamous boat luxury tax, the boat “user fee” tax and the tax on recreational diesel fuel that swamped the boating industry in the 1980s all became law in the dead of night as part of larger omnibus bills.

Right now the boating industry and the federal programs it benefits from are exposed on a number of fronts. H.R. 1702 was recently introduced to end the deductibility of interest on boat loans that qualify as second homes. Titled the “Ending Taxpayer Subsidies for Yachts Act,” this measure could only be passed if, by all accounts, it is included as part of an omnibus bill. The result would be a shock to an industry that has not yet even begun to recover from the Great Recession.

The Sport Fish Restoration and Boating Trust Fund (Wallop/Breaux) is also at risk. The $650 million this fund distributes every year to grow fishing and boating represents a pile of money that the advocates for the “Ending Taxpayer Subsidies for Yachts Act” could argue should be used for higher-priority federal programs such as food safety or air traffic control.

Thrust into this potential meat grinder is Jim Currie, the National Marine Manufacturers Association’s new legislative director. With a wealth of experience working for and with Congress, Currie says H.R. 1702 is unfair because it targets just boats, not RVs or second homes on land. “We just don’t think that’s right,” he says.

Although he had not yet spoken to the staff of the three congressmen who introduced H.R. 1702 at the time that I interviewed him in the NMMA’s Capitol Hill offices, he did say that NMMA staff had “spoken to the staff of all six committees responsible for Wallop/Breaux and they don’t know of any threats to it.” Furthermore, Currie noted that he had recently spoken to Interior Secretary Ken Salazar, who assured him that Wallop/Breaux reauthorization was “on his agenda.”

That said, the question remains: Is the boating industry ready for the congressional crosswinds that might blow across its bow in the months to come?

One potentially significant shortcoming is the lack of a congressional champion for boating who has the position and power to protect the industry. No replacement has been found for Sen. John Breaux (D-La.), the industry’s guardian angel for more than 30 years. He retired in 2005.

Another is the lack of a significant political action committee to support boating’s friends in Congress. Currie says “there may be $75,000 in NMMA’s PAC, and the goal is to raise at least $100,000 per year.” That won’t go very far in supporting the 110 members of the Congressional Boating Caucus. The average run-of-the-mill fundraiser costs $1,000 for House members and $5,000 for senators.

The NMMA deserves credit for creating the Congressional Boating Caucus and building its membership. That said, the caucus lacks heavy hitters on the tax, budget and appropriations committees. It remains to be seen whether the caucus can be effectively deployed when the inevitable budget crunch hits.

Lastly, compounding the fact that NMMA membership is down, the industry suffers from the lack of a grassroots army that it can call out to quell an uprising on Capitol Hill on a moment’s notice. Although money remains the mother’s milk of politics, the coin of the realm in the months to come will be how many boater voters the industry can turn loose on Capitol Hill.

Perhaps it’s time to consider putting those social media databases the industry has been building to use before the next storm comes up.

Michael Sciulla testified more than 30 times on Capitol Hill during a 28-year career at BoatUS, where he managed the organization’s government relations and public affairs operations while serving as editor of its flagship publication. Sciulla will report in Soundings Trade Only on matters in Washington affecting the boating industry in a column called The Capitol Lookout.

Related