PRESENTED BY: Michael Erlandson, Moderator Jeff DeBoer James Dennis Lori Ziebart Lame Duck and Beyond The National Association of Business Political Action Committees 2012 NABPAC POST-ELECTION CONFERENCE

Discussion THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 2 o Election Results o Deficits and the Fiscal Cliff o Key Policy Issues in the Lame Duck & Beyond o Taxes o Real Estate o Energy and Environment o What It All Means in the Real World

Impact of Elections THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 3 o Republican/Democratic ratios not dramatically changed o But some attitudes may have changed o Sets up opportunity for compromise in Lame Duck o Aisle crossing will still be necessary to get legislation to the President’s desk o Next Congress not likely to see sweeping reforms – more maneuvering around the edges o Compromise critical to moving legislation in new Congress

Deficit Overview THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 4 o Projected $1.1 trillion deficit for FY 2012 – 4 th yr over $1 trillion o 1986 – 5% deficit as a percentage of GDP o 2012 – 7.3% deficit as a percentage of GDP (down from 8.6% in 2011) o National debt is $15.98 trillion +/- $1bn o Interest on debt likely to rise from $197bn in 2010 to $778 bn in 2020 o As percentage of GDP - net interest outlays expected to more than double during that period from 1.4% to 3.4%

Fiscal Cliff & Sequester THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 5 o Failure of Deficit Commission left us with the Sequester o $110bn automatic cut in defense & discretionary spending o Congress can: o Do nothing – let Sequester take effect o Delay effective date of Sequester o Agree to a comprehensive compromise o Agree to a smaller compromise o Failure to act likely pushes economy back into recession o Business is bracing for the worst

Other Issues in Lame Duck Session THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 6 o Bush Tax Cuts o Cuts passed in 2001 and 2003 slated to expire at end of year o AMT Patch o Payroll Tax Relief Extension o Extenders o Various individual and corporate tax provisions have either expired or will expire at the end of the year o Farm Bill o Current 5 year bill has expired o Debt Limit Increase o Debt limit reached in January or February o Without action government will shut down

Tax Reform in New Congress THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 7 o Growing consensus that reduction in corporate rate necessary to remain competitive o Several bipartisan deficit reduction plans envision tax reform o Ryan budget and Camp proposal envision reducing top individual and corporate rates to 25% o May be comprehensive or piecemeal o What may be on the table: o Corporate and individual tax rates o Carbon tax o Increases in dividend, capital gains and state tax rates o Repeal/modification of tax credits and deductions, including: o Home mortgage interest deduction o Charitable deduction o Energy tax credits o Accelerated depreciation

Real Estate Industry THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 8 o Credit and Capital Concerns o Mounting commercial real estate mortgage maturities o Dodd Frank and Basel III raise concerns about real estate lending o GSE reform of Fannie and Freddie o Terrorism Risk Insurance Program expires at end of 2014 o Tax Issues o Capital gains and Carried interest o Partnership taxation o Interest deductibility o Depreciation o Environmental Matters o Building Energy Retrofit incentives and mandates o EPA LEAD and stormwater runoff regulations

Energy & Environment THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 9 o EPA o Many regulatory initiatives problematic for industry, particularly coal – continued plant retirements o Stand off among EPA, industry, states, environmental groups, members of Congress o Continued litigation and legislation to stop/modify EPA initiatives o Some companies may look for compromise o Other Issues: o Keystone Pipeline approval o Domestic oil and gas production and regulation o Export of natural gas o Challenges around continued renewable energy development o Push for increased energy efficiency o Infrastructure development

Industry Reaction THE NATIONAL ASSOCIATION OF BUSINESS POLITICAL ACTION COMMITTEES | 10 QUESTIONS