The dysfunctional debate over the debt limit is not only stalling the fate of America's financial future, it is also putting the brakes on progress in the private sector, specifically job creation and investments.
Interviews conducted with corporate leaders led the Washington Post to conclude that “executives lack confidence that political leaders can execute the basic nuts and bolts of governing.” The paper describes executives and “frustrated” and “hostile” toward both President Barack Obama and his agenda.
The business world has its gripes with Obama's proposed tax increases, citing lower inclination to hire and invest as negative effects of the plan. But, according to the Post, America's business leaders are also not endorsing Republicans' claims that tax increases will mean a sudden death for job creation.
“...Many executives says that 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.”
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Lawmakers on both sides seem to be ignoring a fundamental reality of business — companies despise uncertainty.
“Most businesses don’t make big investments or ramp up hiring when they see a substantial risk of the economy tanking,” according to the Center for American Progress, which describes the current situation as a “big risk.”
The organization also says that this ongoing failure to raise the debt limit could result in the largest quarterly economic decline since 1947.
Lyle Heidemann, CEO of True Value, told the Washington Post, “We can handle decisions we don’t agree with … that’s easier than not knowing what the decision is going to be.”
Resistance to hiring and investing is a natural and logical reaction to the lack of direction in Washington.
While an issue like the debt limit looming, it is difficult for companies to conduct business, because they have no idea what type of future environment they’ll be operating in. Issues like taxes and interest rates are not trivial matters, after all, that businesses can just shrug off.
The Center for American Progress suggested it’s worthwhile to consider where the country has been on jobs over the past couple of years.
According to the organization, the former president, George W. Bush, left office with private sector job loss of more than 800,000 in his last month. “The decline in the numbers of jobs being lost turned to net job gains in early 2010, and generally things were getting better. In 2011, the three months from February through April, each with job growth of more than 200,000, were encouraging — even if growth was not as strong as we would all like to see.”
Now that the nation's focus is on the debt-ceiling debate and the taxation and spending cut conversation that has come along with it, Americans are having to bear the frustration that results have not been forthcoming on the political front.
There are a growing number of sentiments like those issued by Jason Speer, General Manager of Quality Float Works in Schaumburg, Ill., who told the Washington Post, “We’re kind of holding back on hiring and major purchases. We’re waiting and seeing what effect all this will have on our credit and on our ability to do business overseas.”
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