By Vicki Needham - 10/20/13 11:15 AM EDT
Business groups are urging Washington policymakers to seize the chance in budget talks to tackle a slew of major economic issues.
Taxes, entitlements and immigration reform remain top priorities for business leaders who say lawmakers must take steps to bridge their fiscal differences and shift their focus to nation's long-term economic challenges.
The fiscal deal inked Wednesday keeps the government open until Jan. 15 and extends the debt ceiling until Feb. 7.
"I have a slim hope that they will have a conversation about tax reform and reset our expectations about the size and scope of the federal government," French said.
"Any time we can get them talking it is an opportunity, in our view, that really needs to happen to unleash our economic potential."
House and Senate conferees will embark on a budget conference committee before month's end where many business leaders hope, at least, that a plan will emerge for Congress to better navigate prickly issues. They are aiming to provide an agreement by mid-December.
French called tax reform "one of the most important things Washington can do in the next several months."
John Engler, president of the Business Roundtable, an association of CEOs, echoed similar sentiments saying he is hopeful that the conferees can conjure a plan that would provide an avenue toward entitlement, tax and immigration reform.
NAM President and CEO Jay Timmons argued that the most recent fiscal agreements did nothing to "address the underlying causes of our serious fiscal problems."
"All that is guaranteed is that we will find ourselves in this situation again in a few months," he said.
"Manufacturers need Washington to implement reforms that will address our broken tax code and massive entitlement costs to help our nation avoid such brinksmanship in the future."
The NRF along with U.S. Chamber of Commerce, the National Association of Manufacturers and the Business Roundtable are several of many trade groups that peppered lawmakers and the White House with letters ahead of and during the 16-day government shutdown, imploring them to avoid an economically damaging closure or debt ceiling breach.
"The Chamber urges the administration and Congress to avoid a self-made economic crisis in upcoming debates by committing to work with one another on a plan to restrain federal spending, correct the unsustainable growth of entitlements, reduce our debt and enact comprehensive tax reform," said U.S. Chamber of Commerce CEO Thomas Donohue after the bill passed.
While business groups have warned that Washington's insatiable appetite for brinksmanship has damaged economic growth and hampered the recovery, Congress has remained on a spin cycle of standoffs.
"The parties don't agree and they're fighting for political supremacy," French said.
Meanwhile, congressional leaders are vowing, this time around, not to walk fiscal issues out to the precipice.
But French is quick to acknowledge that "deadlines were made for brinksmanship" and the problem becomes anchored in congressional dysfunction when many rank-and-file lawmakers feel it is the only way they they can make a stand.
The problem has likely been further exacerbated by the budget paralysis of the past several years.
"We've been at a crossroads for years and I'm not sure that two months will resolve the issues in any constructive way," French said.
"They may just agree to put it off for a later date."
As lawmakers embark on a broad-ranging budget deal they will have to weigh the 0.5 percentage point hit that the economy likely took in the fourth quarter as evidence as to what their stalemates can do.
Mark Zandi, chief economist at Moody's Analytics, said at this rate the economy will remain stuck in, at best, "a 2-percent growth world until lawmakers remove the existential threat of a debt limit breach from the political debate."
Zandi remains concerned about what lawmakers may do in the first several months of the year but he expects them to be "less destructive in the next round of debate over the budget and debt limit."
"I can’t imagine policymakers taking us down the same dark road again in the next few months, given the damage this will do to the economy and their reelection efforts," he said.
French called that level of growth "a frightening prospect for the future."
"We're stuck barely above maintenance levels and no one getting ahead when the economy is barely keeping its head above water," he said.