Washington’s leading business groups on Tuesday denounced Congress’s inaction on the “fiscal cliff” of budget cuts and tax hikes, saying the growing uncertainty about fiscal policy has frightened companies across the nation.
Leaders from the U.S. Chamber of Commerce, Business Roundtable, the National Association of Manufacturers (NAM) and the National Retail Federation (NRF) warned lawmakers against raising taxes when they return after the election while stressing that Congress needs to stop kicking the can down the road.
“For large businesses, medium-size businesses, for the Mom and Pop, the individual entrepreneur, what are the rules? It’s like we’re playing with the replacement referees,” John Engler, the president of the Business Roundtable, said.
“Tell us what the rules are,” Engler said at the panel discussion hosted by Leading Authorities.
There is a fear in the business world that lawmakers will deadlock after the election and fail to prevent the looming tax increases and budget cuts set to take effect in January — a scenario that would hurt the economy, the panelists said.
“When you got people walking around up there on the Hill saying we should let this happen, chilling effect doesn’t cover [it] in terms [of] the way it damages the psyche,” said Matthew Shay, NRF’s president and CEO.
Jay Timmons, NAM’s president and CEO, said letting the Bush-era tax rates on high-earners expire, as Democrats have proposed, would damage small businesses and hurt the economy.
“Two-thirds of manufactures take taxes as S corporations, pay the individual tax rate, so if you raise taxes on the supposed wealthy in this country, what you’re doing is you’re disincentivizing manufacturers from investing and creating jobs,” Timmons said. “Small businesses matter in this country.”
Tom Donohue, the Chamber’s president and CEO, urged lawmakers to keep in mind that many small-business owners pay taxes at an individual rate.
“On the tax side, you damn well better remember in that top group of people ... what it is it’s a lot of small companies ... who take that money out and roll right back in again. We better be careful that we know what we are talking about,” Donohue said.
Any deal between lawmakers on how to resolve the fiscal cliff is unlikely until after voters head to the polls in November.
Donohue said the outcome of the election would have a huge impact on the shape of any deal to avert the fiscal cliff.
“The bottom line is we are going to first see who wins. That’s going to tell you a hell of lot of stuff,” Donohue said.