Hopefully businesses and investors will persuade our new Congress that certainty is important to a positive investment climate. Evidently more things affect the economy than just fracking!
(To save Goat some time, yes, this article is from the left wing, communist loving, Pravda/AL Jazeera subsidiary New York Times.
)
Uncertainty in Washington Poses Long List of Economic Perils
By JONATHAN WEISMANDEC. 2, 2014
WASHINGTON
- As House Republicans mull another round of fiscal brinkmanship with President
Obama, a dark cloud is threatening to return to otherwise clearing economic
skies: fiscal and political uncertainty.
Republican leaders moved Tuesday to finesse their way around
another government shutdown next week, but the fiscal gantlet extends well
beyond Dec. 11, when the current stopgap spending law that funds much of the
federal government expires.
Absent congressional action, a host of business and personal
tax breaks expires on Jan. 1. The government's borrowing limit is reinstated on
March 16, although the government might not actually hit the ceiling until
August.
On March 28, unless lawmakers act, physician reimbursements
from Medicare drop off a cliff. On May 31, the highway trust fund runs out of
money. In June, the Export-Import Bank, which helps finance overseas purchases
of American exports, might shut in the face of conservative opposition to its
mission. Then on Sept. 30, the entire Children's Health Insurance Program faces
its expiration. A few days later, across-the-board spending cuts loom once
again.
"I see a lot of potential for Republicans to use all these
fiscal speed bumps as leverage points," said Joel Prakken, a co-founder of
Macroeconomic Advisers, a forecasting firm that calculated that previous fiscal
fights, combined with tighter budgets, shaved as much as 1 percentage point off
economic growth, a big sum considering that growth has averaged an annual rate
of 2.15 percent since Republicans took control of the House in 2011.
Washington brinkmanship is returning just as federal, state and local governments finally
cease to be a drag on the economy through spending cuts and, in some cases, tax
increases. Federal spending rose nearly 10 percent in July, August and
September, mainly for the military, after falling 1 percent the quarter before,
according to the federal Bureau of Economic Analysis. But with Republicans
taking over both houses of Congress next month, budget cutting will be back in
style.
"Investors should prepare for a return of this type of
behavior and volatility in Washington
in 2015 as governing-by-crisis appears ready to return," Chris Krueger, an
analyst at Guggenheim Securities, warned clients on Tuesday.
The Business Roundtable, which represents chief executives
of the nation's largest companies, released a tepid 2.4 percent economic growth
forecast for next year on Tuesday, citing continuing weakness in capital
investment. Leaders of the group will meet with President Obama and
congressional leaders on Wednesday, in part to press an agenda that is craving
stability in tax and fiscal policy.
"From a businessman's standpoint, uncertainty in general
just has a huge impact in how you think of the future, how you plan for capital
investment and how you plan for hiring," said Randall L. Stephenson, chairman
of AT&T and of the Business Roundtable. "Just go down the long list.
There's a wide range of possible outcomes on policy, so you have to come to a
more conservative approach to planning."
Congressional leaders moved to clear up some uncertainty
Tuesday, but in so doing, they may merely create more. House Republican leaders
would like to pass a measure funding the government through Sept. 30, but
keeping the Homeland Security office open only for short bursts to pressure the
president over his executive action deferring deportation of illegal immigrants.
Most House Republicans appeared ready to go along with this
half measure, but conservative groups opposed the strategy as not
confrontational enough on issues like the Environmental Protection Agency's
climate change regulations or the Department of Housing and Urban Development's
antidiscrimination efforts. Anti-immigration conservatives made it clear they
would keep opposing the undocumented-worker executive order.
"This is the time to fight, this is the ground to fight on,
and I'm a little bit amazed that that isn't more clear to more people,"
declared Representative Steve King, Republican of Iowa.
Negotiators have all but given up culling the government's
growing list of temporary tax measures, making some permanent and jettisoning
the most egregious tax giveaways. Instead, the House will vote Wednesday on a
measure to restore almost all the tax breaks that expired last year for one
year retroactively. That would allow taxpayers to claim them on their 2014 tax
returns while forcing Congress to grapple with the issue again early next year.
"Short of not passing anything at all, this is probably the
worst of all possible worlds," said Senator Orrin Hatch, Republican of Utah and
the incoming chairman of the Senate Finance Committee. "Rather than the
certainty that would come with making some of the more prominent individual and
business tax extenders permanent, families, individuals, and businesses will
have to once again put long-term plans on hold in hopes that Congress can get
its act together next time around."
Meantime, 45 House Republicans pleaded with their leaders to
bring to a vote a multiyear extension of federal terrorism risk insurance,
which is set to expire this month. The issue is vital to developers in Lower Manhattan and elsewhere, who cannot get large
building projects insured in the private sector without a government backstop.
Representative Jeb Hensarling of Texas , chairman of the House Financial
Services Committee and an opponent of the seven-year terrorism insurance bill
passed 93-4 by the Senate, said no, blaming Senate Democrats for not agreeing
with his position.
"If Senate Democrats continue to insist on their 'my way or
the highway' approach, I fear a long-term reauthorization may have to wait
until the next Congress," he said.
The price of such shenanigans is high. Macroeconomic
Advisers' analysis in October 2013 said spending cuts alone - many forced by
budget standoffs - cut economic growth by 0.7 percentage points since 2010,
while raising unemployment by 0.8 percentage points. Uncertainty alone raised
corporate bond prices, lowered growth by 0.3 percentage points a year and
raised unemployment last year by 0.6 percentage points.
Some economists say the overall impact may be overblown. As Washington nears another showdown, stock prices tend to
sag and some bonds get dumped in a fire sale, said Alec Phillips, managing
director for United States
economic research at Goldman Sachs. Then they snap back post-crisis.
Leaders in neither party wanted to defend the contortions to
come. "The American people certainly do not want to face another year being
governed by crisis," warned Senator Harry Reid of Nevada , the majority leader until next
month. "No one wants the kind of cliffhanger fights we've had again and again
in years past."
(To save Goat some time, yes, this article is from the left wing, communist loving, Pravda/AL Jazeera subsidiary New York Times.
Uncertainty in Washington Poses Long List of Economic Perils
By JONATHAN WEISMANDEC. 2, 2014
WASHINGTON
- As House Republicans mull another round of fiscal brinkmanship with President
Obama, a dark cloud is threatening to return to otherwise clearing economic
skies: fiscal and political uncertainty.
Republican leaders moved Tuesday to finesse their way around
another government shutdown next week, but the fiscal gantlet extends well
beyond Dec. 11, when the current stopgap spending law that funds much of the
federal government expires.
Absent congressional action, a host of business and personal
tax breaks expires on Jan. 1. The government's borrowing limit is reinstated on
March 16, although the government might not actually hit the ceiling until
August.
On March 28, unless lawmakers act, physician reimbursements
from Medicare drop off a cliff. On May 31, the highway trust fund runs out of
money. In June, the Export-Import Bank, which helps finance overseas purchases
of American exports, might shut in the face of conservative opposition to its
mission. Then on Sept. 30, the entire Children's Health Insurance Program faces
its expiration. A few days later, across-the-board spending cuts loom once
again.
"I see a lot of potential for Republicans to use all these
fiscal speed bumps as leverage points," said Joel Prakken, a co-founder of
Macroeconomic Advisers, a forecasting firm that calculated that previous fiscal
fights, combined with tighter budgets, shaved as much as 1 percentage point off
economic growth, a big sum considering that growth has averaged an annual rate
of 2.15 percent since Republicans took control of the House in 2011.
Washington brinkmanship is returning just as federal, state and local governments finally
cease to be a drag on the economy through spending cuts and, in some cases, tax
increases. Federal spending rose nearly 10 percent in July, August and
September, mainly for the military, after falling 1 percent the quarter before,
according to the federal Bureau of Economic Analysis. But with Republicans
taking over both houses of Congress next month, budget cutting will be back in
style.
"Investors should prepare for a return of this type of
behavior and volatility in Washington
in 2015 as governing-by-crisis appears ready to return," Chris Krueger, an
analyst at Guggenheim Securities, warned clients on Tuesday.
The Business Roundtable, which represents chief executives
of the nation's largest companies, released a tepid 2.4 percent economic growth
forecast for next year on Tuesday, citing continuing weakness in capital
investment. Leaders of the group will meet with President Obama and
congressional leaders on Wednesday, in part to press an agenda that is craving
stability in tax and fiscal policy.
"From a businessman's standpoint, uncertainty in general
just has a huge impact in how you think of the future, how you plan for capital
investment and how you plan for hiring," said Randall L. Stephenson, chairman
of AT&T and of the Business Roundtable. "Just go down the long list.
There's a wide range of possible outcomes on policy, so you have to come to a
more conservative approach to planning."
Congressional leaders moved to clear up some uncertainty
Tuesday, but in so doing, they may merely create more. House Republican leaders
would like to pass a measure funding the government through Sept. 30, but
keeping the Homeland Security office open only for short bursts to pressure the
president over his executive action deferring deportation of illegal immigrants.
Most House Republicans appeared ready to go along with this
half measure, but conservative groups opposed the strategy as not
confrontational enough on issues like the Environmental Protection Agency's
climate change regulations or the Department of Housing and Urban Development's
antidiscrimination efforts. Anti-immigration conservatives made it clear they
would keep opposing the undocumented-worker executive order.
"This is the time to fight, this is the ground to fight on,
and I'm a little bit amazed that that isn't more clear to more people,"
declared Representative Steve King, Republican of Iowa.
Negotiators have all but given up culling the government's
growing list of temporary tax measures, making some permanent and jettisoning
the most egregious tax giveaways. Instead, the House will vote Wednesday on a
measure to restore almost all the tax breaks that expired last year for one
year retroactively. That would allow taxpayers to claim them on their 2014 tax
returns while forcing Congress to grapple with the issue again early next year.
"Short of not passing anything at all, this is probably the
worst of all possible worlds," said Senator Orrin Hatch, Republican of Utah and
the incoming chairman of the Senate Finance Committee. "Rather than the
certainty that would come with making some of the more prominent individual and
business tax extenders permanent, families, individuals, and businesses will
have to once again put long-term plans on hold in hopes that Congress can get
its act together next time around."
Meantime, 45 House Republicans pleaded with their leaders to
bring to a vote a multiyear extension of federal terrorism risk insurance,
which is set to expire this month. The issue is vital to developers in Lower Manhattan and elsewhere, who cannot get large
building projects insured in the private sector without a government backstop.
Representative Jeb Hensarling of Texas , chairman of the House Financial
Services Committee and an opponent of the seven-year terrorism insurance bill
passed 93-4 by the Senate, said no, blaming Senate Democrats for not agreeing
with his position.
"If Senate Democrats continue to insist on their 'my way or
the highway' approach, I fear a long-term reauthorization may have to wait
until the next Congress," he said.
The price of such shenanigans is high. Macroeconomic
Advisers' analysis in October 2013 said spending cuts alone - many forced by
budget standoffs - cut economic growth by 0.7 percentage points since 2010,
while raising unemployment by 0.8 percentage points. Uncertainty alone raised
corporate bond prices, lowered growth by 0.3 percentage points a year and
raised unemployment last year by 0.6 percentage points.
Some economists say the overall impact may be overblown. As Washington nears another showdown, stock prices tend to
sag and some bonds get dumped in a fire sale, said Alec Phillips, managing
director for United States
economic research at Goldman Sachs. Then they snap back post-crisis.
Leaders in neither party wanted to defend the contortions to
come. "The American people certainly do not want to face another year being
governed by crisis," warned Senator Harry Reid of Nevada , the majority leader until next
month. "No one wants the kind of cliffhanger fights we've had again and again
in years past."
