After Obama Win, Tough Tax Talk on the Table
November 12, 2012
The next two years will be a period of big measures coming out of Washington, and REALTORS® have to be prepared for the possibility that the mortgage interest deduction is unlikely to escape unscathed.
That’s the sober warning REALTORS® received from one of the country’s most widely respected political commentators, Charlie Cook of the Cook Political Report. At the Legislative and Political Forum during the 2012 REALTORS® Conference & Expo in Orlando, Cook joined National Journal White House correspondent Major Garrett for a look at why the national elections earlier this week went the way they did—and what to expect now that President Barack Obama has been reelected and the House and Senate remain split.
“I don’t think MID will be targeted” for cuts by itself to help address the country’s deficit, but “it’s going to get affected, it’s going to change,” Cook told thousands of REALTORS®.
Cook thinks the cap on itemized deductions that Republican presidential nominee Mitt Romney talked about in the last stage of his campaign could very well be the template Congress looks at—likely in the next six months—to help cut the deficit. Whether it’s based on a dollar limit or a percentage limit, itemized deductions, including MID, will be affected, “no doubt about it,” Cook said. “The world is different.”
Garrett pointed to the response on Wall Street, where the stock market lost 400 points the day after the election, as a sign the federal government must come to grips with the deficit. Lawmakers must start by avoiding the fiscal cliff the country faces at the end of the year, when hundreds of billions of dollars in tax cuts expire, Garrett said. Failure to do that could take three percentage points off U.S. GDP and send the country back into recession. “Congress will have to answer [for that],” he said. “Will the political leadership make a premeditated decision to put the economy back into recession?”
Cook said he expects lawmakers to forge a deal before the end of the year on avoiding sequestration—the round of automatic spending cuts that will impact defense and other discretionary spending categories—and take up some type of tax reform in 2013.
Both commentators said Republicans woke up to a new country the day after the election, because it was the strength of the demographic shift sweeping the United States that enabled the President to win despite the tepid economic recovery after his four years in office, something that historically has sunk previous incumbents seeking reelection.
Garrett pointed out that Obama managed to win significantly more electoral votes as Romney—332 to 206—even though he lost the white vote “by a landslide,” or about 20 percent.
Against this demographic shift, Garrett said, Republicans can’t stay competitive at the presidential level if they don’t find a new way to talk about issues that are important to the up-and-coming demographics of the country—minorities, young people, singles—or at least, as Cook suggested, not talk about subjects that distract from their core economic message, like the rape issue that was attributed to the losses of two Republican Senate candidates who were otherwise expected to win.
—Rob Freedman, REALTOR® Magazine
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Updated: September 25, 2020