Cardin: Maryland is threatened by belt-tightening

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Maryland’s economic strengths could make the state “particularly vulnerable” to belt-tightening in Washington as lawmakers debate cuts to defense, education, environmental protection and other spending, U.S. Senator Ben Cardin said.

The state’s junior senator, a 44-year veteran of elected office, said a compromise between the Republican-led House of Representatives and President Barack Obama would harm education programs, and could threaten funding for federal facilities and academic institutions that drive Maryland’s high-tech and biotechnology sectors.

“NIH is here. NIST is here. NSA is here. FDA is here. We have all the alphabet here, and they’re going to be cut,” Cardin said in a wide-ranging interview with Daily Record reporters and editors. “The Republican budget cuts the NIH budget by more than $1 billion. That’s going to have an impact on the state economy and whether we continue to bring the brightest minds into our region, whether our academic centers still maintain their focus.”

Said Cardin: “We have a lot of highly talented people who have great opportunities here. Some are going to get lost.”

Likely to survive the cuts, Cardin said, is the influx of military jobs coming to the state as part of the Base Realignment and Closure process. Maryland expects to see some 60,000 direct and contractor jobs come to the state from BRAC and up to 15,000 from the U.S. Cyber Command move to Fort Meade.

“It’s not going to end,” Cardin said. “I don’t think we’re going to lose the missions, but it might slow down.”

Long term, however, as the state grapples with adding those 75,000 commuters to its roads and rail, Cardin said Maryland could suffer as the Pentagon has rebuffed lawmakers’ attempts to get the Department of Defense to help local communities pay for transportation needs around bases and military installations.

“My guess is that [need] will go unmet,” he said.

Bay cleanup in peril

The more immediate pain could also be borne by the Chesapeake Bay, where cleanup efforts would not be funded under a Republican budget plan, and other infrastructure projects that local leaders say are necessary to keep people moving in the increasingly crowded Baltimore and Washington metro areas.

“As a nation, we need to put a priority on transit and inter-city rail, and intra-city rail,” Cardin said. “The MARC system is critically important. We need high-speed rail going up, replacing the traditional rail that we have in our region, and around the country.”

Cardin said Maryland’s congressional delegation is pressing for funding for all three of Gov. Martin O’Malley’s top transportation projects — the east to west light rail lines in suburban Washington and Baltimore and the Corridor Cities Transitway from Rockville to Clarksburg.

“We think we’re going to find a way to get it done,” Cardin said of Baltimore’s Red Line. He added, however, that project is vulnerable to the funding crunch in Washington, where lawmakers have let linger a long-term transportation authorization.

“I can’t believe Congress will be silent on that issue,” Cardin said.

The senator said one solution to the funding shortfall could be found in energy legislation. Lawmakers will try to restart its cap and trade efforts — though under a different name and with more restrictions than the bill that failed in the last Congress — and Cardin said he’s looking for colleagues to support a plan to use emissions taxes or fees to pay for transportation projects.

“The gasoline tax is pretty toxic,” he said.

Cardin blamed the failure of cap and trade and other initiatives with bipartisan support on “politics at another level.”

“The difficulty is at the higher pay levels where we decide what policies we want to move forward,” he said.

Reevaluate farm subsidies

Cardin said Congress needs to re-evaluate farm subsidies, and should change the tax code to rely more on consumption or use taxes than income tax, while protecting low-income earners to spread the burden more fairly, and simply.

“We hemorrhage more revenue in our tax code than we collect,” he said. “If you eliminate all the deductions, exemptions, etc., the rates would be half of what they are today.”

As part of his budget-balancing plan, on March 9 Cardin introduced a bill that would eliminate the subsidy for companies that blend ethanol with gasoline. The program pays blenders 45 cents per gallon, and Cardin said his bill would save $6 billion a year.

Bringing the government’s revenues and expenses closer together would also allow Congress to bring U.S. levies in line with its global competitors, Cardin said.

“We have a legitimate complaint from our business community that the corporate income taxes in this country are noncompetitive internationally,” he said. “That’s a legitimate complaint and we should deal with that.”

Compounding the issue is the U.S. policy of applying the tax — set at 35 percent now — on sales made outside the country while many Asian and European nations with which the United States competes do not.

“When you manufacture products here in America, you’re penalized,” Cardin said.

Cardin also had harsh words for the federal procurement process, which he said ignores many small businesses and minority- and women-owned firms.

“Most of the federal agencies pay lip service to procurement rules when it comes to small business,” he said.

Cardin said contracts are bundled to make them too big for small businesses, while procurement officers too often rely on the large contractors they know best. In many cases, he said there hasn’t been a “good faith effort” to include companies with minority or female owners.

Cardin, a member of the Senate Small Business Committee, said he plans to hold hearings on the issue in Maryland and elsewhere around the country.

Prime contract abuse

“There’s a lot of prime contract abuse in the system,” he said, “and there’s a lot of bullying going on. That is, large companies force small companies to sell their patents because they want to get government work.”

For Cardin, the eventual solution to the budget impasse must rein in military spending and raise revenues to take the pressure off domestic programs.

“National defense has to be our top priority, but we can’t spend so much more than any other western country,” he said.

Driving tough budget talk from both parties is the $14.2 trillion national debt and $1.5 trillion budget deficit.

“I don’t believe in my entire legislative career, which spans a long time, we’ve ever been in a situation like this,” said Cardin. “We have a deficit we can’t see our way out of at this particular moment.”

During the 2010 campaign season, Republicans called for $100 billion in cuts to discretionary domestic spending, which makes up about 12 percent of the budget. The new GOP majority in the House of Representatives has passed $61 million in cuts, but Democrats in the Senate and President Obama have balked, forcing the federal government to limp along on resolutions that fund its operations for just a few weeks at a time.

Cardin said the country needs certainty, both and in the short-term and long. He pointed to incentives and other provisions in the tax code, some 140 of them, on which many businesses rely, but are subject to Congressional approvals every two years.

“The best thing Congress can do is make permanent our policies,” he said. “And I’ll tell you, even if we don’t get everything right, America will adjust whatever we do as long as they know what the rules are. So get it done. Make a decision, so investors know where they can invest, so innovation will fill the gaps, but you’ve got to give certainty. Don’t worry about perfection. Let’s give some direction to America.”