Skip to comments.Fearing an Impasse in Congress, Industry Cuts Spending
Posted on 08/06/2012 11:01:49 AM PDT by SeekAndFind
A rising number of manufacturers are canceling new investments and putting off new hires because they fear paralysis in Washington will force hundreds of billions in tax increases and budget cuts in January, undermining economic growth in the coming months.
Executives at companies making everything from electrical components and power systems to automotive parts say the fiscal stalemate is prompting them to pull back now, rather than wait for a possible resolution to the deadlock on Capitol Hill.
Democrats and Republicans are far apart on how to extend the Bush-era tax breaks beyond January the same month automatic spending reductions are set to take effect unless there is a deal to trim the deficit. The combination of tax increases and spending cuts is creating an economic threat called the fiscal cliff by Ben S. Bernanke, chairman of the Federal Reserve.
Until recently, the loudest warnings about the economy have come from policy makers and economists, along with military industry executives who rely heavily on the Pentagons largess and who would be hurt by the government reductions.
But more diversified companies like Hubbell Inc. in Shelton, Conn., have begun to hunker down as well.
Hubbell, a maker of electrical products, has canceled several million dollars worth of equipment orders and delayed long-planned factory upgrades in the last few months, said Timothy H. Powers, the companys chief executive. It has also held off hiring workers for about 100 positions that would otherwise have been filled, he said.
The fiscal cliff is the primary driver of uncertainty, and a person in my position is going to make a decision to postpone hiring and investments, Mr. Powers said. We can see it in our order patterns, and customers are delaying.
(Excerpt) Read more at nytimes.com ...
They are holding back because they know if Obama wins he’s going to stick it to um like it’s never been stuck before.
They are holding back because if Romney wins his plans won’t work right away if at all.
RE: They are holding back because they know if Obama wins hes going to stick it to um like its never been stuck before.
Let’s say (God forbid), Obama wins... are they still going to hold back?
I mean, by that time, they’ll know what’s the White House agenda is for the next 4 years.
How long will businesses hold back before they say — OK, we gotta do something other than stand still....
If Obama wins, they'll wait to see who gets the leadership positions in Congress. If it's weepy and blinky (Boehner and McConnell) again, they'll know nothing will change and things will get worse. If hopefully we get some good TEA Party leadership in that will actually DO things, then businesses will know that Obama will be contained.
if they are going to Go Galt they may as well do it now where it would have the added benefit of taking out Obama’s re-elect bid.
There are rumblings that some coordinated effort of this sort is in the works.
If 0bama wins, it will highlight the three different types of business in the United States:
1. They are here but not for long: these are the global players or businesses with the ability to pull up their stakes and leave. Those that have not done so already, will beat feet for the exit.
2. They are stuck here: these are the smaller businesses and have less mobility. They are going to look to sell out (probably to someone in category 1 above), close shop and live off whatever accumulated wealth they have, or will retrench and make their last stand in the last ditch.
3. They are here to stay, and you have to pay: These are the GM’s, GE’s and Solyndras. They are just fine with another 0bama term to pump borrowed federal money into their coffers. Of course, there will be kickbacks, but it’s a cost of doing business, right? It’s inefficient crony capitalism, or American corporate fascism with nominal “ownership” in what’s basically a command economy. Soon Americans will be waiting in line for toothpaste and toilet paper. Just like our old rivals in the now-departed USSR used to do.
RE: then businesses will know that Obama will be contained.
Or, Obama will CONTAIN Congress with his veto pen. It cuts both ways really.
Let’s say both houses are won by the GOP and they vote to authorize the Keystone Pipeline to be built... Obama then vetoes it.
Ever hear of impeachment and removal?
Many will just close the doors and stop the financial hemorrhaging. Stash the cash and do something else. Downsize to a level that will permit an extended hunker down. My company has been shrinking and relocating as much as possible. We're in the bull's eye for a big hit with sequestration. We know from past harsh experience that when those engineers with the corporate memory to run the sophisticated DoD tasks are dumped on the street, they are never coming back. Those projects are toast. They will find an employer who isn't going to dump them and will have no reason to return.
They are holding back because if Romney wins his plans wont work right away if at all.
So you don’t believe in Capitalism? If Romney cuts spends simplifies the tax code broadens the base so more people are paying income tax. Get rid of erroneous regulation then in about 10 months or so the economy will start to grow at about 7%!
I had similar sentiments in response to cableguymn's comment.
Despite 0Bamma not wanting egg on his face 4 days before the election, wait’ll all the defense contractors send out thousands of WARN notifications in the face of Sequestration. These CEOs can’t run their corporations based upon the “unknown...” Besides, 0Bamma has proven he is no friend of business or free enterprise. 0Bamma is the reason for the belt tightening and non-hiring!
What, pray tell, do these people think is going to happen that will paralyze the work being accomplished in Washington?
This NYT article is highly biased and full of unsourced opinion as usual. Destroying less taxpayer wealth on fat assed government hirelings and foodstampers supports economic growth. It does not undermine. The biased word largess means generous gifts. I doubt very much the Pentagon gives out gifts.
You're an idiot. Removal requires two-thirds. Where are you going to find one Democrat, much less a dozen or more, to vote Obama out?
Nice language. I am talking about the next Congress.
” They are holding back because they know if Obama wins hes going to stick it to um like its never been stuck before.”
So you dont believe in Capitalism?
absolutely I do.
I am not sure Romney does. He is taking the right talk.. but his walk.. well...
The recession began the moment Obama killed off Hillary and took a commanding poll lead, months befor the actual 2008 election.
Business has gone Galt for four years in case no one has noticed.