Business leaders beg for action on coming fiscal crisis
KEELY BRAZIL With election-year politics in the rearview mirror, the business community on Nov. 7 called for a “cease-fire” between the White House and a divided Congress, in hopes that leaders of both parties will come together to deal with the so-called “fiscal cliff” before it’s too late.
Business leaders say striking a deal before year’s end would give them the certainty needed to increase hiring, but not doing so would slow growth and potentially send the economy into another recession.
“For the president, I think he can look forward to going out on a pretty high note, if he can get this done,” Business Roundtable CEO John Engler told reporters. “We believe strongly that with the election behind us, it’s time to roll up our sleeves and go back to work. We need to get busy right away and get this fiscal cliff resolved.”
The “fiscal cliff” refers to a double-whammy of huge spending-cut sequesters under an antideficit deal and the expiration of the George W. Bush-era tax cuts, both of which are set to happen automatically at the start of January. All sides in Washington agree it needs to be avoided, but the Obama administration and Senate Democrats can’t agree with House Republicans about how exactly to do that.
This stalemate has led to uncertainty in the business community. Jay Timmons, president and CEO of the National Association of Manufacturers, warned that if the fiscal cliff is not resolved, the economy would lose 12.8 percent growth of gross domestic product and nearly 6 million jobs by 2015.
“I don’t think there’s anything more urgent than the fiscal crisis,” he said.
Mr. Engler called for Congress to put aside its differences, with House Republicans realizing they’re now the “minority in Congress” and become willing to discuss a reasonable deal, and the Obama administration taking a “Bill Clinton-like” approach of compromise to the negotiating table.
“House Republicans are in a position where they’re going to have to respond to the initiatives coming from the president,” Mr. Engler said. “You get to have some say, but you’re not in charge of the whole government. You can’t sit back and say, ‘It’s my way or the highway.’ ”
On the other side, the AFL-CIO took credit for several of President Obama’s key victories in such battleground states as Ohio, Wisconsin and Nevada and rejected separate cuts to Social Security, Medicare and Medicaid, calling for higher taxes on the wealthy instead.
“We did deliver those states, we did do a good job in those states, and I think without the efforts of organized labor, those three states would have been different,” AFL-CIO President Richard Trumka told reporters. “None of the three would have been in the president’s column.”
The AFL-CIO said it used more than 65,000 volunteers, who were responsible for the president’s re-election.
According to election night polling from the AFL-CIO, 65 percent of union members voted for Mr. Obama. In Ohio, he received 70 percent of the union vote — a constituency Mr. Trumka described as “83 percent white, 40 percent evangelical and 53 percent gun owners.”
After the victory, Mr. Trumka called for higher taxes on the top 2 percent of Americans and more spending on manufacturing and education.
But business leaders complained that they already face high tax rates. Mr. Timmons said it is 20 percent more expensive to manufacture in the U.S. than elsewhere, largely because of high taxes and regulations.
“We haven’t always had the highest rates,” he said. “What’s happening is other countries are getting smart and their reducing their taxes, because they know that’s the way to attract investment.”
Business leaders also called on Mr. Obama to reconsider some of the regulations his administration has levied, which they said makes it hard to compete. They have long complained about heavy-handed regulations, and with the president being re-elected this concern also has contributed to a degree of uncertainty.
“I think the president was elected on a pledge to grow the economy and create jobs,” Mr. Timmons said. “There are a lot of regulations that are pending right now that could have a significant financial impact on manufacturers, and ultimately, impede their ability to invest. My hope would be that the administration takes a fresh look at all of these regulations.”