Mary Moore Hamrick, National Managing Principal of Public Policy for Grant Thornton LLP
January 17, 2013
As part of the ULI Charlotte CoffeeTalk breakfast series, ULI welcomed Mary Moore Hamrick, National Managing Principal of Public Policy for Grant Thornton LLP. Mary Moore leads Grant Thornton’s public policy initiatives and government affairs efforts, and is the firm’s primary liaison with members of Congress, the accounting profession’s standards-setters, regulators and other policymakers.
Mary Moore began the conversation by collecting attendee topics of interest including budget issues, the spending deficit, tax reform and how these issues will impact our economy from a business perspective, specifically as it relates to new job creation, and real estate development.
Mary Moore suggested taking off our ‘political hats’ and discussing the issues from a business perspective. She gave an example of a family that earns $24,000, spends $36,000 and uses a credit card to finance the deficit of $11,000, and carrying a balance of $160,000, and that same family going into the bank and asking for a credit increase when they are not paying down the balance. While all attendees agreed that the bank would not agree to this increase, Mary Moore indicated that this is exactly what is happening at the national level as it relates to government spending. She indicated that spending is approximately $3.6 trillion a year, with only $2.4 trillion in revenue coming in which is leaving our country with a budget deficit of approximately $1.2 trillion for the last four years.
She continued with noting that the spending issue has not been addressed. With an effort to not fall over the fiscal cliff, many decisions were made regarding the tax issues but nothing has been done yet regarding the spending issue.
The meeting became event more interactive with attendees raising questions and concerns. It was stated that the real estate business is all about trades and transactions built off consumer confidence and with more uncertainty in Washington, there will inherently be less transactions as people are concerned about the cost of capital rising. The conversation went back to the issues with unemployment. With no spending cuts, confidence may get worse and hiring will continue to be suspended. When people are back to work, paying bills, this will generate transactions. If companies in the real estate and construction industry cannot get contracts, they cannot get lending from the banks and in turn there is no hiring.
It was stated that many clients of attendees in the real estate and construction industry tried to right size their individual businesses 2-3 years ago and they continue to struggle with doing business with their current number of employees as they still need help but can’t afford to hire new employees. The discussion shifted specifically to the unemployment in Charlotte. While we have had indication that the unemployment rate in Charlotte is above the national average, it was stated that Charlotte is really a ‘tale of two cities’ with the unemployment rate more like 4-5% for those with a college degree, and 18-19% for those with less than a college or high school education. Mary Moore indicated that currently there are 140,000 jobs created each month at a national level and in order to bring down the unemployment rate, 300,000 jobs need to be created each month.
The issue that plagued the room was “how do we cut spending in a manner that doesn’t negatively impact growth?”
So ‘what happens next?’ Mary Moore stated this has to be a national debate. There is a real frustration in Washington with Congress being split and divided but it is no wonder given the country is split and divided. Republicans and Democrats have two completely different answers to the problem with one party wanting to raise taxes to handle the debt ceiling increase and the other party suggesting the focus should be on seeing spending reduced. Participants in the room felt that to those outside of Washington, there was no appearance that spending cuts would be made and “this is where people are scratching their heads.”
So it will likely be April before we figure out what the plan will be given the current budget goes through March 27th, 2013. People want to know what will be different. What happens if the debt ceiling is not raised and there is a downgrade in credit rating? What is the risk to the capital markets? Mary Moore suggested it may be the business community that may lead the country out of these problems. She indicated that there are some optimistic entrepreneurs in Washington that will provide ‘rays of hope’ as it relates to moving both political parties forward in making decisions.
Overall, the message from Mary Moore was that we should all educate ourselves on the issues and enlighten ourselves on how we fix it. Elected officials need to hear from those of us in the community as the issues in Washington are extremely relevant to each of us both for their impact on the real estate and construction industry that we operate in as well as how future decisions on debt spending could impact us personally.
A link to the event can be found by clicking here.
This recap was written by Lauren Spegal, an audit manager with Grant Thornton. She has been with GT since her start in public accounting eight years ago. Spegal’s focus is in the Construction, Real Estate, and Hospitality industry group.