Md. business forum casts a wary eye on Washington

A quarter of Maryland’s economy depends on federal spending, inextricably linking the state to actions that Congress and the Trump administration are now considering on health care, taxes and all other budget items, a trio of experts told local business leaders Thursday.

“The hard reality is, what goes on in Washington has a tremendous impact on our ability to prosper and grow,” Warren G. Deschenaux, executive director of the Maryland Department of Legislative Services, told the crowd during the Greater Baltimore Committee annual economic outlook conference in Baltimore.

Deschenaux said that Maryland disproportionately benefits from federal salaries, contracts, grants and other money allocated in Washington and under review. Uncertainty hangs over the state as lawmakers consider changes to the Affordable Care Act that could include reductions for Medicaid and tax reform that could lower the corporate tax rate and end popular individual and business deductions, he said.

Maryland takes in about $102 billion a year in federal money, representing about 28 percent of the state economy, he said. Further, about 8 percent of the workforce is federal, compared with 3 percent nationally.

With 2018 midterm elections looming, the health care debate isn’t likely to end, though repeal efforts have been unsuccessful so far, said Paul Keckley, health economist and leading expert on U.S. health industry trends and reform.

But for now, Congress will turn its attention to tax reform, said Dean Zerbe, former senior counsel to the U.S. Senate Finance Committee and AlliantGroup national managing director.

He said lawmakers are unlikely to agree on a major overhaul of the tax code; rather, they will take “several bites of the apple” with a reduction to the corporate tax rate a major focus. It now stands at 35 percent, and President Donald J. Trump has said he wants it lowered to 15 percent.

As the debate on health care showed, not much is easy in Washington, he said. On any changes, he said, “I think it’s all going to be much more modest.”

meredith.cohn@baltsun.com

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