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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.

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.