Fiscal Responsibility

Washington Post: Frustrated Executives Say Political Impasse Slows Hiring, Investing

Wanted to be sure you saw the Washington Post article highlighting the uncertainty felt by the business community as Republicans continue to hold our economy hostage. Republicans often say that we need to give our economy certainty so that we can create jobs, but rather than move forward with a long-term plan that ensures we pay our nation’s bills and reduces our deficit, they are advocating for a short-term proposal that kicks the can down the road and doesn’t give businesses the certainty they need. It’s time for both parties to come together and act quickly on a compromise that pays America’s bills, reduces our deficit and creates certainty so businesses can grow and hire.

Key Excerpts:

Business leaders are becoming exasperated with Washington. And the dysfunction they see in the political system is holding them back from hiring and investing.

Executives lack confidence that political leaders can execute the basic nuts and bolts of governing, as exemplified by the current brinksmanship over raising the debt ceiling, based on interviews with more than a dozen corporate leaders in the Chicago area last week. Indeed, the frustration over the political climate and Washington’s seeming inability to solve problems seems to weigh more heavily in their minds than any specific government policy.

…But in contrast to claims by congressional Republicans that any tax increases whatsoever would stop job creation in its tracks, many executives say they could tolerate somewhat higher taxes if it were part of a broader plan that offered clarity on the nation’s future policies, particularly one heavy on spending cuts.

“What are the rules of the game going to be in the long term?” said Lyle Heidemann, chief executive of the 5,000-store hardware chain True Value. “What our retailers would like to have is consistency and predictability. We can handle decisions we don’t agree with, but that’s easier than not knowing what the decision is going to be.”

The groups that represent businesses in Washington, including the U.S. Chamber of Commerce and the Business Roundtable, have been urging Congress to raise the debt ceiling to avoid the risk of a default or downgrade of the U.S. credit rating, even as many newly elected Republican members of the House — who received support from business interests when running — are reluctant to vote for such a measure. A group of major business groups sent a letter to the president and every member of Congress two weeks ago imploring them to raise the debt ceiling.

The tenor of the debates in Washington has damaged the executives’ sense — long taken for granted — that the taxes and regulatory policies they face will be predictable and reasonably constant. The executives are horrified that the nation might be on the verge of losing its AAA credit rating, and their hunger for a grand bargain — a master plan to determine the nation’s fiscal future over the coming decade — is deep.

“We’re still coming out of a deep crisis and recession,” said Kevin Kelly, chief executive of Heidrick & Struggles, one of the leading executive search firms, who said his conversations with executives in recent weeks have frequently featured fretting over the debt ceiling talks. “There have been fits and starts toward stronger growth, and now the outlook hinges on what happens in Washington.”

At Quality Float Works, a Schaumburg, Ill., company that makes metal float balls for industrial use, the debt mess has general manager Jason Speer nervous that it could lead interest rates to spike and as a result make the line of credit the firm uses to finance its inventory more expensive to manage.

As a result, even with business up 30 percent this year and more long-term orders coming in from customers, “we’re kind of holding back on hiring and major purchases,” Speer said. “We’re waiting and seeing what effect all this will have on our credit and on our ability to do business overseas.”

But for many executives, the uncertainty about how the United States will lower its budget deficit over time and who will pay for it looms most heavily over their decisions.

“Among the other presidents and CEOs I interact with, the only consensus of opinion is none of us has any idea where things are going,” said Scott Morey, chief executive of Morey Corp., a 700-employee maker of electronic equipment in Woodridge, Ill. “And in my observation, the uncertainty we are experiencing is caused almost entirely out of Washington and other governments around the world.”