The year 2012, a presidential election year, had been destined to be all about politics with little policymaking in the nation's capital. The growing concern over the so-called "fiscal cliff," or combined tax increases and spending cuts scheduled for year-end, added fuel to the divisive tone in Washington.
Despite election year partisanship and the troubled fiscal situation, Financial Executives International pushed forward its Top 12 Advocacy Issues for 2012 and accomplished several successes this year. However, much work still remains for the incoming 113th Congress to see key FE! member priorities across the finish line. The following is a look at the highs and lows of 2012, and an outlook for what senior-level financial executives may expect in 2013.
2012 in Review
As the year began, Congress was reconvening after political brinkmanship barely yielded a deal to increase the statutory debt limit, which ultimately resulted in Standard & Poor's downgrading the United States credit rating for the first time in U.S. history. The economy has expanded slowly over the course of this year and the unemployment rate has fallen below 8 percent. Yet, we are again inching closer to the debt ceiling, which is currently set at $16.4 trillion. Credit rating agencies are still issuing warnings to Congress to get the fiscal house of the United States in order or face further downgrades.
Between these fiscal worries and the partisan gridlock of election year politics, it is notable that EH has nonetheless achieved several advocacy goals in Congress.
One is a major achievement for companies that provide their employees with defined benefit pension plans. Today's extraordinarily low interest rate environment creates pressure on companies offering pension plans since a lower rate means higher plan liabilities and potentially higher funding obligations.
To alleviate this pressure, FEI, working with other interested associations, advocated for a legislative provision that would smooth interest rate volatility, thereby lowering future funding obligations and providing long-term pension funding stabilization. This provision was included in the MAP-21 highway bill (H.R. 4348), which passed both chambers of Congress and was signed into law by President Barack Obama in July.
On the financial reform front, FEI and the Coalition for Derivatives End-Users spent countless hours meeting with members of Congress to explain the burdens imposed on businesses using swaps to hedge and mitigate risk by provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
In March 2012, the U.S. House of Representatives heard the...