CBO’s deficit-reduction report doesn’t tell the whole story

Any financial professional who questions the importance of being politically involved must review a publication released late last year by the Congressional Budget Office. “Options for Reducing the Deficit: 2025 to 2034” is a 110-page report that presents 76 ways Congress could slash spending and increase revenue. It gives the individuals who hold our nation’s purse strings a lot to think about. But not all the CBO’s ideas are good ones.

Coming in at over $36 trillion and growing by the second, our national debt truly is colossal. To pay off our country’s obligations, every adult and child in the United States would need to chip in more than $107,000.

Most of us don’t have that kind of money lying around. While many people would agree that reducing the annual budget deficit is a worthwhile goal, financial professionals understand better than most that some of the ways the government might alter spending and revenue would have profound consequences for the financial security of American families and businesses.

The CBO merely provides options and analysis. It does not set policy, and the current report explicitly states that it makes no policy recommendations. But the options outlined in the report are ones that members of Congress have included in past legislative proposals or may put forward in the future. We can’t afford to ignore them.

Just to pick a few of the 76 CBO options, consider whether any of the following would have an impact on your business or clients:

» Increase Medicare Part B premiums.

» Reduce Medicare Advantage benchmarks.

» Modify payments to Medicare Advantage plans for health risk.

» Reduce Social Security benefits for high earners.

» Raise the full retirement age for Social Security.

» Use an alternative measure of inflation to index Social Security and other mandatory programs.

» Increase individual income tax rates on ordinary income.

» Impose a surtax on individuals’ adjusted gross income.

» Raise the tax rates on long-term capital gains and qualified dividends by 2 percentage points.

» Tax carried interest as ordinary income.

» Expand the base of the net investment income tax to include the income of active participants in S corporations and limited partnerships.

» Change taxation of assets transferred at death.

» Reduce tax subsidies for employment-based health benefits.

» Further limit annual contributions to retirement plans.

» Eliminate certain tax preferences for education expenses.

» Lower the investment income limit for the earned income tax credit, and extend that limit to the refundable portion of the child tax credit.

» Impose a new payroll tax.

» Increase the maximum taxable earnings that are subject to Social Security payroll taxes.

» Increase the corporate income tax rate by 1 percentage point.

» Impose a tax on financial transactions.

As you can see from this list, it’s farfetched to believe that deficit-reduction debates won’t touch on issues important to our industry. That’s why it is vital for insurance and financial professionals to have a unified advocacy voice. No one is better positioned to understand how these proposals would impact American consumers or explain to lawmakers why policies need to encourage Americans to mitigate risks, prepare for the future and have confidence that they will be financially secure.

You have the unique ability to tell lawmakers how you work with your clients and how the products and services you offer protect them and help them prosper. Real Life Stories, created and distributed by NAIFA’s Life Happens community, are great examples of the power of storytelling. These videos feature real American individuals, families and business owners along with their financial professionals and illustrate how our industry has come to the aid of people during times of great need. NAIFA has begun using Real Life Stories videos in our discussions with lawmakers to provide powerful and lasting examples of how insurance and financial services improve people’s lives.

Even if you haven’t been featured by Life Happens, every financial professional has a Real Life Story to tell. You have clients who would be much worse off if not for your services. Members of Congress need to know about them as they consider policies that could impact Americans’ financial security. 

Being a strong policy advocate is an important part of serving the best interests of your clients, just like offering financial protection products to create financial certainty and help people navigate financial shocks. A great way to get started in advocacy is to attend NAIFA’s Congressional Conference on May 19-20 in Washington. You’ll learn how to create connections with lawmakers, make a strong impression and build confidence to be the best advocate you can be. 

Financial professionals and our industry offer so much to American consumers and are a vital part of the economy. We can’t let all that you do be lost in the line-item figures of a government report. The best way to spotlight the value of insurance and financial services is to speak up and tell your stories.

Diane Boyle is NAIFA’s senior vice president, government relations. She may be contacted at [email protected].