Ence, Ron, Merski, Paul, Scanlan, Mark, Independent Banker
The 2006 budget proposal: what it means for community bankers
To learn more about key legislative issues for which ICBA is lobbying, visit www.icba.org or read the February cover story package in Independent Banker.
News of President Bush's plan to overhaul Social Security may have done little to excite television viewers to watch the State of the Union Address (the speech drew 38.4 million viewers, the smallest turnout of a president's address to a joint session in Congress in five years), but it certainly had ICBA's legislative staff tuning in.
The Bush administration's fiscal 2006 budget proposal, released on February 7, contained a number of initiatives that could impact community bankers, if passed. Below are a few highlights:
* Deposit Insurance. The Administration continued to push for deposit insurance reform (sans a coverage hike) and warned of possible premiums unless the Bank Insurance Fund (BIF) and the Savings Institution Insurance Fund (SAIF) are merged.
* Credit Unions. The Office of Management & Budget estimates that the cumulative cost of the credit union tax subsidy in the years 2004- 2010 will be $9.9 billion. The 2005 estimate is $1.3 billion, rising to $1.4 billion in 2006.
* Government-sponsored entities (GSEs). The administration called for stronger oversight of the housing GSEs, hinting that it might support limits on the GSEs' growth. The budget also reasserted that Treasury had the legal authority to limit debt issuance by the GSEs, and added that a new regulator should have receivership powers to wind-down a failing GSE.
Tax Item Notes
The fiscal 2006 proposal also included $1.4 trillion in new and extended tax relief, but excludes detail on several top-priority policy agenda items already in motion such as Social Security and tax reform.
Specifically, the president's policy would make the 2001 and 2003 tax cuts permanent. Additionally, the budget proposes incentives that would give small businesses tax credits for contributing to employee Health Savings Accounts and also provide a deduction for the premiums of high-deductible health plans tied to these accounts.
Notably, ICBA applauded the Administration's initiatives to expand private savings opportunities and products that can be offered by community banks. …