How Will the Super Committee Failure Affect Commercial Real Estate?

Yesterday the Super Committee, tasked with reducing the federal deficit, failed to agree on a proposal for Congress. Failure of political leadership to negotiate a deal means uncertainty over the next year. For 2012, the Bush-era tax cuts will remain in effect and are set to expire on December 31, 2012. Congress may make amendments to the mandatory across the board cuts of federal programs. The political impasse will more than likely continue as 2012 is a presidential election year. National budget discussions could change on a daily basis. CCIM Institute will continue to monitor this issue and report back any drastic actions.

What does this mean for CCIMs?

Although no deal was reached, tax rates will be unpredictable beyond 2012. This perpetuates a market of insecurity and a lack of confidence for economic growth. Carried interest will be a possible revenue source for federal funding which means CCIMs and CCIM Institute must remain on alert. The national political debate over the budget will now move toward extending or ending the Bush-era tax rates.

How does across the board cuts of $1.2 trillion impact CCIMs?

Federal government programs will be required to cut their budgets by about 8 percent to 9 percent over the next ten years. This may be good for individual taxpayers. Although this means the federal government will have to reduce spending, healthcare and military programs may also be impacted. The effects of reduced government spending could have unintended consequences, such as reduced funding to state and local governments that are already struggling to balance their budgets.