Kicking the can down the road: In real estate finance circles, it’s become a common phrase for the delaying tactic employed by banks that are unable to refinance mortgages in the face of recession and tight lending practices. In the final days of 2012, kicking the can threatened to become national policy as the White House and Congress tried to strike a deficit reduction deal before spending cuts and tax hikes specified in the Budget Control Act of 2011 took effect, possibly sending the United States off the so-called fiscal cliff.
Quite a challenge for the final days of President Obama’s first term, but nothing new in the partisan climate that has marked the past four years in Washington. Will that rift continue over the next four? Voters opted for divided government again in November, an outcome that suggests continued stalemate. Still, some observers believe that dire circumstances will finally force a shift, as Michael Ratliff reports in this month’s Legislative Outlook, “After the Election.”
(George Ratiu offers additional inaugural thoughts in his Economist’s View.)
Change, however, will require concerted effort on both sides of the partisan divide well beyond Jan. 21. Genuine cooperation is a prerequisite for solving long-term problems. An underperforming job market, the Social Security Trust Fund shortfall, the financial woes of Amtrak and the U.S. Postal Service, and the foundering healthcare safety net are among the issues that will continue to dog the country’s financial health if they remain neglected.
The need for consensus was further underscored when Hurricane Sandy turned inland on Oct. 29 and slammed wide swaths of the nation’s most densely populated region. As the New Jersey Coast and the New York City metropolitan area struggled to recover, President Obama asked Congress for $60.4 billion in emergency aid. That request was expected to be only the first in a series of appeals; the governors of New York and New Jersey estimated a far higher cost of recovery, and as of mid-December, New York City and the region’s transit agencies had yet to make their own requests for assistance.
Financial aid is not the only question that must be addressed as the region rebuilds. Like Hurricane Katrina, the terrorist attacks of Sept. 11, 2001, and other disasters, Sandy’s aftereffects are forcing discussion about the changes needed to withstand similar events in the future. With extreme weather expected to become more common, these conversations range from new coastal development strategies to alterations in property operations, emergency response and business continuity efforts, among other issues. CPE examines the most compelling ideas and best practices in a Special Report beginning on page 26.
Meanwhile, FPL Advisory’s annual Hiring and Compensation Report evaluates the impact of economic recovery on commercial real estate employment—and what could happen if fiscal unity is not achieved. Are your own hiring and compensation practices in line with industry standards and expectations? Compare them and see.
Suzann D. Silverman, Editorial Director