Worried by fiscal cliff, companies scramble to take cover
President Obama is not serious about negotiating with the Republicans. He’s just playing games. if you require proof of that, simply check the previous post. Back in 2011, in much the same circumstances, he insisted that the Republicans need to agree to X, defending his position mightily. Now, the Republicans are offering that same X, and he is saying that X is unacceptable, and that only Y will work . . . and he’s defending that position mightily (And getting lots of cover from the press, natch.)
It’s not serious. It’s a game. He’s just trying to score points. This is exactly what we should expect from someone whose previous credential is as a community organizer.
But for businesses across the country, it’s not a game. It is very serious:
With only weeks to go, American businesses are bracing for the impact of the “fiscal cliff” in major ways. Fear of a sudden increase in tax rates on Jan. 1 is driving a range of business actions from a steep drop in hiring plans to a record wave of special stock dividends and corporate borrowings aimed at enabling investors to take advantage before a possible tax hike.
Among those scrambling ahead of the deadline are the nation’s manufacturers, who reported their first drop in hiring plans in three years last month, with many citing concerns about the prospect of tax increases and deep spending cuts if the White House and Congress fail to reach a long-term budget deal.
“The fiscal cliff is the big worry right now. We will not look toward any type of expansion until this is addressed,” one producer of fabricated metals told the Institute for Supply Management in its survey of manufacturers last month. A petroleum and coal producer told the institute that it expects federal tax and budget policies to be its biggest business concerns for the next year or so.
The institute’s report, which showed that manufacturing fell back into recession territory last month, “is a clear indication of the negative impact that the looming fiscal cliff is already having on our economy,” said Chad Moutray, chief economist for the National Association of Manufacturers.
“Manufacturers remain extremely nervous about the direction of the economy,” he said. “Without a resolution to the fiscal cliff, the economy will remain weak and stagnant.”
Beyond manufacturing, hundreds of businesses have specifically cited concerns about the fiscal cliff in their earnings reports and filings with the Securities and Exchange Commission in recent weeks.
See also this press release from Speaker Boehner’s office:
White House Bluster Pushes America Closer to Cliff
With a new offer yesterday, Republicans have made a good faith effort to find common ground and avoid the fiscal cliff. In its initial response, the White House made clear it has no intention of finding middle ground. In fact, a statement from White House Communications Director Dan Pfeiffer was breathtaking in its insincerity. Let’s dive into it.
- “The Republican letter released today does not meet the test of balance.” – Amazing. By any measure, the Republican offer is more balanced than the President’s proposal. The GOP offer includes $800 billion in new revenue through tax reform that lowers rates, coupled with $1.2 trillion in spending cuts as well as $200 billion in savings from a revision to the way inflation is calculated. Compare this to the President’s plan which includes $1.6 trillion in tax increases and just $400 billion in spending cuts – which are wiped out by stimulus and other measures he’s demanding. Our ratio: $800B to $1.2T. His ratio: $1.6T to $0. Tell me which is more balanced.
- “In fact, it actually promises to lower rates for the wealthy and sticks the middle class with the bill.” – There is absolutely nothing to support this statement. The GOP offer proposes revenue only from the same top earners that the President talks about. Independent budget groups have demonstrated there are multiple ways to achieve the level of revenue in our offer without raising rates or touching the middle class. You’ll recall, the level of revenue in our plan is what was barely able to pass the Senate earlier this year (with 51 votes). Given that the makeup of Congress has not changed, seeking anything more is a waste of precious time.
- “Their plan includes nothing new.” – Interesting, considering the President’s plan is just his budget. Still, Mr. Pfeiffer makes a good point. All of the spending cuts in the GOP offer are ones that the President has previously agreed to in private talks. (Bob Woodward wrote a book on the topic.)
- “Independent analysts who have looked at plans like this one have concluded that middle class taxes will have to go up to pay for lower rates for millionaires and billionaires.” – Again, false.
- “While the President is willing to compromise to get a significant, balanced deal and believes that compromise is readily available to Congress, he is not willing to compromise on the principles of fairness and balance that include asking the wealthiest to pay higher rates.” – Despite Republicans’ offer to put real revenue on the table, the President has offered no concessions whatsoever. That is a fact. When will this willingness to compromise materialize?
With the clock ticking, Republicans continue to be the only ones making any effort to avoid the fiscal cliff. Despite jobs being on the line, it seems the White House is not willing to stand up to the ‘cliff jumpers’ on the Left. For a President who claims to understand the peril of second-term overreach, we’re sure setting up to see a nice reminder of how that tends to work out.