By Matthew Bechard

Congressman Benjamin L. Cardin (D-MD) has spent his entire career in politics. Since first being elected to Maryland's House of Delegates in 1967, Cardin has taken an active role impacting the way Americans think about money by sponsoring several key pieces of legislation. In particular he has been lauded as a "pension advocate" having helped ensure the availability, stability and viability of pension plans for American workers.

Most recently, his work on the Pension Preservation and Savings Expansion Act of 2003 set the groundwork to eliminate barriers that prevented workers from being offered a retirement plan, in addition to other key provisions. In 2001, his legislation to increase the amount Americans can contribute to their 401(k) plans and IRAs was enacted into law.

Cardin was elected to the U.S. House of Representatives in 1987 and was instrumental in the passage of the REIT Modernization Act (RMA) in 1999. The RMA, among other things, allowed REITs to form taxable REIT subsidiaries that can perform specialized services for REIT tenants and others.

Cardin currently serves on the Ways and Means Committee, is ranking member of the Human Resources Subcommittee and is a member of the Social Security Subcommittee. He is also a member of the Homeland Security Committee and ranking member of the Commission on Security and Cooperation in Europe.

One of the most REIT-savvy members on the Hill, Cardin recently spoke with Portfolio about a number of issues including the upcoming election, pension reforms, benefits of REIT investments and the strength of REITs in his home state.

On Key Election Issues

With nearly 40 years in state and national politics, Cardin has witnessed first-hand numerous changes in the political landscape. Of all those changes, the rise in partisanship has had the biggest impact, Cardin says.

"Both Republicans and Democrats approach policy-making almost as a battle, trying to score points so that one side wins and the other side loses," Cardin says. "As someone who is goal oriented and focused on policy-making, I find this trend in partisanship destructive to governing."

In this partisan environment, Cardin and his fellow Democrats in the House have been in the minority since 1995. However, Cardin is cautiously optimistic that high voter turnout sparked by a tighter than usual presidential election could help the Democrats regain some seats in Congress.

"I don't have a crystal ball, but it seems pretty certain that this will be a very close presidential election. The Democrats are energized by Sen. John Kerry so I think there will be high voter turnout and that usually bodes well for Democrats," Cardin says.

As for which issues he expects will hold the most sway with voters, Cardin says above all else it will be the economy.

"Of great concern to Americans is the so-called ‘jobless recovery.' There can be no lasting recovery unless it translates into more jobs," Cardin says. "Voters will support the person they think has the strongest vision for the economy and jobs. Voters will focus on the growing national deficit."

Cardin says voters will also be looking to see which candidate has the clearest understanding of the external threats that face this nation and a plan for dealing with them.

In addition, Cardin, who was a vocal opponent of the plan, says that President Bush's recent tax cuts have put the country in a difficult situation.

"The two major tax cut bills President Bush has advocated and signed into law have depleted our Treasury of trillions of dollars of revenue, and plunged us back into 1980s-level deficits," Cardin says. "The estimated cost of these tax cuts is approximately $2.2 trillion (or $1.7 trillion if you accept the numbers originally touted by the administration). The long-term budget estimates from the CBO have gone from $5.6 trillion in surplus to $2.8 trillion in deficit in three years.

Such deficits threaten our funding of important priorities such as the war on terrorism, the wars in Iraq and Afghanistan, health care, homeland security, education, veterans benefits, etc, etc."

On Pension Reform

In 2001, Worth Magazine named Cardin one of the top "100 people who have influenced the way Americans think about money." TIAA-CREF has called him a "pension advocate" for his efforts to write and sponsor two major pieces of pension legislation. Most recently, Cardin introduced the Pension Preservation and Savings Expansion Act of 2003 (H.R. 1776) that would have broken down barriers preventing workers from being offered a retirement plan at work, among other benefits. H.R. 1776 was a scaled back version of legislation proposed by Cardin and Rep. Rob Portman (R-OH) earlier in 2003 and was met with a highly charged partisan fight that has left the bill's passage into law in its current form in doubt.

Despite the legislative battles that have been fought to come this far, Cardin is encouraged that progress is being made in the area of pension reform.

"The biggest obstacles this year to enacting pension legislation are election-year politics and the budget deficit," Cardin says. "We do have bipartisan support for further pension improvements, and I am hopeful we can make progress this year in pension legislation."

Most importantly, Cardin says the government must remove roadblocks that discourage employers from offering pension plans to their employees and encourage retirement savings investments by making low and moderate-income savers credit both permanent and refundable.

"I am a strong supporter of defined benefit plans because they provide a guaranteed benefit to employees," Cardin says. "We need to address the many funding challenges facing the defined benefit system."

For those employees that do have an available retirement plan, Cardin says that they could benefit by having greater access to financial retirement savings advice.

"H.R. 1776 would provide for pre-tax savings for independent financial advice," he says. "It also would require greater notice requirements for employees about their employers' management of their retirement plans."

On REITs' Role

Related to the management of the plans is ensuring that employees are offered well-diversified options for their retirement savings. In this respect, Cardin says real estate stocks can play a vital role.

"Real estate investment is an important part of a diversified portfolio, and as such REITs provide greater diversity and therefore stability to pension accounts," he says.

Cardin has been active on the legislative front in the expansion of the publicly traded REIT industry. As a lead sponsor of the REIT Modernization Act, Cardin was instrumental in improving the efficiency and effectiveness of the modern REIT industry.

"The RMA was designed to help REITs become a more effective investment vehicle," Cardin says. "This law reduced the systematic risk associated with REITs, and therefore hopefully increased their attractiveness as an investment vehicle. The effects I have seen are an increase in market capitalization and a greater buzz about REITs, aided by the recent strength in the real estate market."

Cardin has continued his support of the industry and most recently co-sponsored H.R. 1890, the Real Estate Investment Trust Improvement Act of 2003, with Rep. Jim McCrery (R-LA) and other House colleagues in April 2003.

"This important legislation would remove several areas of legal uncertainty, make it more difficult to lose REIT status for minor rule infractions, and equalize treatment of investment in REITs and investment in other corporations with respect to foreign investment," he says.

On REITs in Maryland

Maryland was the first state to enact a REIT statute in 1963, and since then Cardin's home state has become the unofficial home of REITs. There are now more than 100 REITs incorporated in Maryland—by far the most of any state.

"Even though other states have enacted abbreviated REIT statutes in recent years, Maryland was the first. Over the years, Maryland's laws have proven very favorable to REITs," Cardin says.

For example, Maryland limits the possible liability of shareholders for obligations of the REIT to the same extent as any other corporation.

In addition to incorporating in Maryland, approximately 74 different REITs own property within the state.

"Maryland has a lot to offer businesses in a wide range of industries, and REITs are no exception. REITs own a great range of property types from the D.C. suburbs to Baltimore and have played a key role in Maryland's continuing economic development," Cardin says. "Many regions within the state are not only growing but are thriving, and I think REITs have contributed to that growth and will continue to benefit from the positive economic and business climate in Maryland."