Business Leaders Decry The Economic Cost Of Uncertainty
Running a company is like driving a car. You need to be able to see what's coming down the road. The dysfunction in Washington has created a fog, and when driving in the fog, you have to slow down.
That's basically what's happening at thousands of companies around the country.
Bob Mosey, chairman of the National Tooling and Machining Association, bemoans the "uncertainty of not being able to plan for the future."
Mosey, whose trade group drew hundreds of manufacturing companies to Boston this week for a conference, said despite a two-week government shutdown, Congress "just kicked the can three months down the road. ... We're just going to be going through this again in three months."
Although the federal government reopened, CEOs at the conference said they remain concerned that lawmakers won't come together on at least the annual budget, let alone longer term tax and entitlement reform.
"A lot us were hiring like crazy; a lot of small manufacturing firms are still looking for skilled labor," says Patrick Shrader, vice president for Arundel Machine in Maine. "But what this has done is it just slowed down that whole need to hire more people."
Arundel Machine makes parts for military drones and submarines, as well as all kinds of non-military equipment. But Shrader says his business is hurt by not knowing where the government is going to be making cuts. "Right now they're not giving any numbers for what they believe that future funding is going to be."
And as a result, Shrader says his company has to play it safe. "We have hiring on hold right now. Until we know what's going to happen, we're not looking to grow the company."
If you take what Shrader's saying and multiply it by thousands of businesses large and small across the country, the ongoing deadlocks in Washington have to be taking a toll.
Joel Prakken, co-founder of the forecasting firm MacroEconomic Advisors, says in the past few years this short-term crisis driven fiscal policy has stunted growth in the U.S. by hundreds of billions of dollars a year. And when it comes to jobs: "The unemployment rate is higher to the tune of about 900,000 jobs."
Over the past three years, about a million more Americans would have jobs if things were working better in Washington, according to Prakken.
At the manufacturer's conference, Grady Cope, president of Reata Engineering and Machine Works in Englewood, Colo., says Congress is "playing with fire."
"Our customers start wondering, do they need to hold back and not purchase? So there's a chain reaction," says Cope, whose company is doing well, and just added five workers. But Cope's $4 million Small Business Administration loan was on hold during the government shutdown, and he says the debt ceiling showdowns hurt sales by making his customers nervous. "It's a huge deal," he says, "but I hope Congress understands that they're playing with fire."
Business leaders are now sending a pretty unified message to Washington: This ongoing dysfunction is hurting the U.S. economy.
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