debt ceiling Archives - Shopfloor

Manufacturers Tell President, Congress to Find a Debt Solution

By | Economy | No Comments

As the government shutdown drags on and the deadline to raise the debt ceiling grows precipitously closer, uncertainty is once again standing in the pathway to economic growth.

Today, in a letter to the President and House and Senate leadership, NAM president and CEO Jay Timmons laid out manufacturers’ concerns and urged our leaders to push past the partisanship that has defined Washington in recent years to “put the nation’s best interests first by addressing the debt limit.”

Timmons made special note that failure to meet the United States financial obligations would “seriously disrupt our fragile economy and have a ripple effect throughout the world.”

Make no mistake about it – the current partisan environment is frustrating to us all. However, the fallout for letting these differences push our nation into default on our debt will be felt for years and every sector of our economy will suffer the consequences.

Manufacturers are hopeful that the President and Congress will find a way to do what is necessary to prevent such an economic catastrophe and the NAM will continue to urge policymakers to arrive at a solution as quickly as possible.

Manufacturers and Biz Groups Call for Congress to Pass CR and Debt Ceiling

By | Economy | No Comments

The NAM joined with almost 240 groups to send a letter to members of the House and Senate today urging them to arrive at a compromise to pass a continuing resolution to keep the government funded and to raise the debt ceiling to avoiding defaulting on our nation’s loans. Failure to do either represent a dangerous path for the U.S. economy and for long term growth potential.

The NAM and business groups told Congress:

“We appreciate fully the importance of restraining federal spending, both discretionary spending and mandatory spending, to reduce federal budget deficits, contain the growth of federal debt, and thereby re-establish fiscal discipline in the near-term and for the long haul. However, with the U.S. economy continuing to underperform, the federal government needs to maintain its normal operations pending a successful outcome of broader budgetary reforms. It is not in the best interest of the employers, employees or the American people to risk a government shutdown that will be economically disruptive and create even more uncertainties for the U.S. economy.

Likewise, we respectfully urge the Congress to raise the debt ceiling in a timely manner and remove any threat to the full faith and credit of the United States government. However, entitlement spending remains the main driver of these deficits and high debt levels and must be addressed. Today we spend $1.6 trillion on just three of the nation’s entitlement programs – Social Security, Medicare and Medicaid. In 10 years, the total price for these programs will soar to $3 trillion.”

The letter makes the position of the business community absolutely clear – failing to pass the CR and raise the debt ceiling will have serious ramifications – but there is a critical need to address entitlement reform and mandatory spending to get our fiscal house in order. Until we do so, the U.S. can not escape this cycle of financial uncertainty.

Monday Economic Report – January 7, 2013

By | Economy | No Comments

Here is the summary for this week’s Monday Economic Report:

With a last-minute deal to avert the fiscal cliff, manufacturers have fewer uncertainties to worry about at the start of the new year. The threat of an economic downturn appears to have largely dissipated, with modest growth in real GDP of 2 percent or so expected this year. However, while the agreement ensures that tax rates for most individuals will remain the same, marginal tax rates will rise for some manufacturing companies that are organized as pass-through entities.

The agreement delays budget sequestration for two months, but that only extends the uncertainty over how this matter will be resolved. In addition, policymakers did not even begin to address the long-term fiscal challenges that confront us by ensuring meaningful tax and entitlement reforms. However, because of the structure of the agreement, they will have additional opportunities to do so over the next few months when they must address the debt ceiling limit, sequestration and the soon-to-expire continuing resolution that funds the government.

The data released last week tended to reflect an economy that was strengthening, even as it continues to show signs of persistent weaknesses. On the employment front, manufacturers added 25,000 net new workers. This is a healthy figure to end the year on, with 180,000 additional jobs in 2012 and 522,000 since the end of 2009. Still, the pace during the second half of the year was much slower than the first half, and it would be encouraging to see the sector producing outsized output and employment growth again. Sentiment surveys have tended to show some manufacturers pulling back on hiring. This might change if business leaders see an economy on more solid footing.

There are some signs that the U.S. and global economic environments have stabilized. As noted in the Global Manufacturing Economic Outlook released on Friday, January 4, seven of our top 10 markets for manufactured goods are growing—an improvement from just three months ago when much of the world outside of North America was experiencing declines. Looking specifically at the U.S. market, the Institute for Supply Management’s (ISM) Purchasing Managers’ Index (PMI) shifted from contraction to a slight expansion last month, with export orders and hiring helping to lift the measure. While there is still much progress to be made on this front, the positive PMI number is good news. Similarly, the Dallas Federal Reserve Bank reported higher activity levels and increased manufacturing business confidence in its region.

This week, the key highlight will come on Friday with the release of new international trade data for November. The October data reflected reduced exports and imports as a result of slowing global growth. With improvements in some countries, we will see if manufactured goods exports begin to pick up. Other numbers to watch include data on consumer credit, job postings and small business optimism.

Chad Moutray is the chief economist, National Association of Manufacturers.

Debt Ceiling Done, But Congress Has More Work Ahead

By | Economy | No Comments

With hours to spare, Congress sent a debt ceiling compromise to the President.  As the August 2 deadline approached, the stops and starts in the negotiations created some tense moments—but did anyone really expect that Washington wouldn’t wait until the last moment?

The President and Congress had to raise the debt ceiling to allow the federal government to pay its bills—bills it had already incurred or promised to pay.  While some argued against raising the debt limit and letting the federal government juggle its finances to pay some of its bills, this strategy would not work.  In fact, a government default on even some of its obligations would hurt everyone—businesses, investors, retirees, and those of us who rely on government services (and we all do to some extent).

While raising the debt limit was a necessary step, it’s clear that Washington also has to do something to rein in federal spending.  Twenty years ago, it cost about $1.3 trillion to run our government.  Today, it costs nearly three times that—an estimated $3.4 trillion this year. Our budget deficit this year is projected to be about $1.5 trillion; we are borrowing 44 cents for every dollar we spend from future generations. This kind of deficit spending is not sustainable and already has begun to threaten long-term economic growth.  Given the historically high level of the federal deficit, it is imperative that policymakers look both at real and immediate spending cuts and structural changes that address the long-term deficit.

To the credit of Washington policymakers, the debt ceiling compromise does begin to address our deficit problem, with an immediate $900 billion cut in federal spending and at least $1.2 trillion more over the next two years.  But this is just a start.  We need further spending cuts that target both the discretionary and mandatory spending sides of the ledger, while also keeping in mind the priorities of a national government.  National defense, for example, is one of the most important, if not the most important, functions of a government.  Congress and the President must preserve our nation’s ability to defend itself and its citizens.

Congress and the President should also avoid taking steps that would stifle economic growth in their efforts to bring down the debt.  Economic growth is an essential component of any plan to rein in our debt.  Growth, for example, produces higher revenues—so we won’t have to borrow as much.

In short, as Congress and the President look for ways to cut spending, they must avoid making the easy political choices and instead opt for a plan that upholds our nation’s priorities and puts us on a path toward a strong, growing economy.

With this latest Washington crisis behind us, Congress has left town for the rest of the summer.  When it returns, it will face other matters of urgency.  Congress still must pass the three pending free trade agreements.  The research and development tax credit is set to expire.  Manufacturers are waiting on Congress to do something about the harmful regulations coming out of federal agencies.

Congress should enjoy the break.  There’s a lot to do ahead.

Manufacturers Urge Lawmakers and President to Increase Debt Ceiling

By | Economy, Taxation | No Comments

Manufacturers have been watching the debate on raising the debt ceiling with great concern over the past month. They understand that if the U.S. government defaults on their obligations, job creators cannot succeed or grow, much compete globally. Manufacturers, such as the LORD Corporation have reached out to elected officials, stressing the importance of reaching a deal to raise the debt ceiling and also to address the ever-growing spending problem in Washington. The letter states:

“America cannot afford to renege on its commitments, and LORD would not be in a position to add jobs if our country were to default on its loans. Assuming that there is a last-minute deal to raise the debt limit and avoid default, the terms of this deal will also have a direct impact on our ability to add jobs and remain competitive in the future.”

Earlier this month, the National Association of Manufacturers sent a press release and joined with over 400 other organizations in a letter to leaders in both the House of Representatives and Senate, as well as to the President, expressing the critical importance of raising the debt ceiling to ensure the stability of our economy, and preventing an economic catastrophe. Default is not an option; it would be a fundamental failure of the government to fulfill the obligations they have made.

The reality is that Washington continues to spend more than it takes in – this is fiscal irresponsibility at the highest level. Individuals are expected to pay their taxes, mortgages and other bills and live within their means – should it be any different for the government? There is no question that we must pay the bills our nation has incurred, but moving forward, an era of fiscal responsibility is needed to sustain the economic health of not only America, but the global economy.

Manufacturers, Business Community Weigh in on Debt Limit

By | America's Business, Economy, Small Business, Taxation | No Comments

The clock is ticking. Lawmakers have less than a month before the August 2 deadline to raise the debt ceiling, and we’re just days away from the President’s July 22 target date for a deal.

What happens in the coming days will have significant impact on the country’s economic future. With the stakes so high, almost 500 business organizations today sent a letter to the White House and the Capitol urging policymakers to reach a fiscally responsible agreement.

From the letter:

[I]t is critical that the US government not default in any way on its fiscal obligations. A great nation – like a great company – has to be relied upon to pay its debts when they become due. This is a Main Street not Wall Street issue. Treasury securities influence the cost of financing not just for companies but more importantly for mortgages, auto loans, credit cards and student debt. A default would risk both disarray in those markets and a host of unintended consequences. The debt ceiling trigger does offer a needed catalyst for serious negotiations on budget discipline but avoiding even a technical default is essential. This is a risk our country must not take.

The letter also calls on lawmakers to take steps to stabilize our $14 trillion-dollar debt and rein in deficit spending.  Lawmakers will have to make difficult choices, but they should not sacrifice economic growth by raising taxes on job creators.  NAM President and CEO Jay Timmons made that point recently, saying,

Manufacturers are urging our elected officials to work together to bring down our federal deficit by taking a hard look at government programs and making difficult     decisions to cut spending, especially in the entitlement area, without increasing the tax   burden on manufacturing or any individual manufacturing sector.

Americans are concerned about the nation’s unsustainable debt and anemic job growth.  Congress and the President can address both issues in the debt ceiling negotiations by making difficult decisions to cut spending and reform government programs and rejecting tax increases that would stifle job creation.

Secretary Geithner Cites Past in Addressing Debt Ceiling

By | Economy, Taxation | No Comments

Treasury Secretary Tim Geithner took a new tack this afternoon in encouraging Congress to act to raise the government’s debt ceiling. Earlier this week, Geithner sent a much-expected letter to Congress making it official that the United States had maxed out on it’s ability to borrow to meet its financial obligations.

At an event hosted by the Harvard’s Shorenstein Center, Geithner reminded Congress that the level of the national debt reflects funds already committed and spent.  In short, this is water under the bridge and we need address this and to move on to the future. Here at the NAM, we, too have found it’s easier to navigate the ongoing budget debate by breaking it down into the Past, Present and Future

In typical Washington fashion, legislators went first to the Present and after more than six months agreed on legislation that funds the federal government until the end of the current fiscal year.  We feel strongly that Congress needs to go back to the Past and raise the debt limit so that the federal government can meet its financial obligations. 

But we can’t stop there.  One reason we are in a fiscal bind is because of high levels of government spending and we must take a look hard look at federal outlays and how we can control federal spending.

Finally, on to the Future, fiscal 2012 and beyond.  The House last month approved a budget blue print and we commend House members for taking on the difficult and challenging task of identifying policies to improve the fiscal situation and to achieve fiscal soundness over the long run. Manufacturers urge the Senate to follow suit so we can start looking ahead.

Click here to view Secretary Geithner’s remarks in full

Dorothy Coleman is vice president for tax and domestic economic policy, National Association of Manufacturers.

Debt Ceiling: Uncertainty Rises and Business is Alarmed

By | Economy, General | No Comments

The federal government hits the debt ceiling Monday, and Treasury will shuffle money around to avoid economic catastrophe. In fact, it look likes Treasury will be able to work with various accounts so it can meet its obligations at least through August 2.

Thus, no immediate global collapse, but the risks multiply. In a letter Friday, Treasury Secretary Timothy Geithner wrote: “A default would inflict catastrophic, far-reaching damage on our nation’s economy, significantly reducing growth and increasing unemployment.”

Agreed. The current state of affairs is untenable, worsening the sense of uncertainty that is the enemy of investment and economic growth.  Sixty-one national, state and local business groups — including the National Association of Manufacturers — last week sent Congressional leaders a letter urging action to raise the federal debt limit. From the letter:

Raising the statutory debt limit is critical to ensuring global investors’ confidence in the creditworthiness of the United States. With economic growth slowly picking up we cannot afford to jeopardize that growth with the massive spike in borrowing costs that would result if we defaulted on our obligations. It is critically important that the United States stands fully behind its legal obligations.

In making this recommendation, we remain extremely concerned about the level of the federal debt and large annual budget deficits and remain committed to working with you and the Administration to address our Nation’s fiscal challenges. Tough calls on U.S. spending must be made as part of a debate about the budget and we agree that restoring balance to our fiscal position will require that the government spend less and spend more wisely.

Coverage …

Meanwhile, Tim Carney of The Washington Examiner finds in the business association letter what he always finds, evidence of “big business” getting in bed with the federal government. You know,  unprincipled rent-seeking plutocrats like those at — well, let’s check the letter’s signers — the Oshkosh Chamber of Commerce, Northeast Pennsylvania Manufacturers and Employers Association, the Colorado Association of Commerce and Industry. Come to think of it, the National Association of Manufacturers has thousands of small member companies.

Smaller companies, too, tend to dislike uncertainty and shrink at the idea of the federal government defaulting on its obligations.

Meet U.S. Obligations, Raise the Debt Limit

By | Economy, Taxation | No Comments

From The Hill, “Business groups likely to align with president in debt-ceiling fight“:

“We have been very upfront. We support an increase in the debt limit. We need to meet our obligations,” said Dorothy Coleman, vice president of tax and domestic economy policy for the NAM. “There is a huge downside to default.”

NAM remains neutral on the question of attaching a long-term deficit-reduction plan to the debt-ceiling vote.

“We have been neutral on how it gets done. Our interest is that it does get done in a timely fashion,” Coleman said.