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Posted: 9:00 p.m. Tuesday, Nov. 13, 2012
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By Randy Tucker
Now that the election is over, business leaders are hoping for a resolution that would avoid the mandatory tax increases and spending cuts that many feel will throw the country back into recession.
Today, a group of CEOs will meet with President Barack Obama to discuss their concerns about the so-called fiscal cliff.
Meanwhile, some of their local counterparts say reaching a deal — regardless of the terms — is paramount.
“The uncertainty is what it all comes down to with us,” said Henry Dean, vice president of operations for the Dayton-based Boston Stoker coffee chain. “No matter what the conditions are, we can develop a business plan to operate in that environment. But when you can’t predict the future accurately, it makes it pretty tough.”
Like most business operators, Dean is concerned about the impact on sales if the federal government allows Bush-era tax cuts on businesses and individuals to expire on Jan. 1, and mandatory government spending cuts — otherwise known as sequestration — to take place a the end of this year.
Last week, the Congressional Budget Office said the fiscal cliff would drive the U.S. economy back into recession and result in a jump in the jobless rate to 9.1 percent by the end of 2013.
That would erase almost all labor market gains over the past year in which the national unemployment rate fell from 8.9 percent to 7.9 percent in October, and the jobless rate in Ohio dropped from 8.6 percent to 7 percent in the 12 months that ended in September.
The CBO report casts an ominous shadow on businesses that rely on a thriving workforce.
“We’re always trying to predict where the consumer is going to be,” Dean said. “Recently, things have gotten tremendously better for us in downtown Dayton as more people are gong back to work. When people aren’t going to work…I’m not selling them coffee.”
President Obama announced last week that he would meet with labor leaders and some of the nation’s top chief executives at the White House before meeting with bipartisan leaders of the House and Senate on Friday to try to avoid economic catastrophe.
The president continues to press his plan to raise taxes for the wealthy to help pay down the government’s $1.1 trillion budget deficit, a plan that most congressional Republicans oppose. But House Speaker John Boehner, R-West Chester Twp., also said last week he was “hopeful” the fiscal crisis could be averted and didn’t rule out increasing tax revenues by eliminating some deductions and tax loopholes.
Political experts doubt a deal can get done before the end of the year.
“I think they (Congress) will get something done eventually, but I just don’t think it will get done during the lame duck,” said Bryan Marshall, a political science professor at Miami University. “There’s really no agreement unless you agree on every last detail, and that’s going to take a long time.”
Dave Dysinger of Dysinger Inc., a tooling and machining company in Dayton, said it’s time for both political parties to put partisan bickering aside and think about what’s best for the country.
“I’m a conservative, and I vote Republican,” Dysinger said. “But I’m frustrated with both parties because I think what they have done now for a long period is govern for their own party power instead of governing for the very people that they claim to serve.”
Still, Dysinger is optimistic Congress and President Obama can come to terms.
“To allow sequestration to happen in any form doesn’t serve anybody,” he said. “I expect Boehner, and I expect Obama and I expect (Senate majority leader) Harry Reid to come together and compromise a solution somewhere in the middle — not on the crazy left or crazy right — but somewhere in the middle.”
Even if the compromise involves higher taxes, a deal is better than no deal, Dysinger said.
“In terms of my business, the best I can do is try to anticipate what’s going on….and then make business decisions flavored by that,” he said. “But I will not invest into the unknown. Our leaders need to give us a believable and predictable path so that we feel comfortable that our investments are reasonably secure.”
Before the election, many business leaders said they’d be more likely to invest in their companies under Republican challenger Mitt Romney than President Obama, often citing the cost of the president’s signature health care plan that would penalize businesses with 50 or more employees for not providing health care.
A poll conducted at the end of October by the non-partisan Harrison Group and American Express Publishing found that 39 percent of business leaders surveyed said they would increase investment in their companies if Romney was elected, while 37 percent said they would lower their investments if Obama won.
Jim Brock, an economics professor at Miami University, said while the survey reflects legitimate long-term concerns about rising costs, the fiscal cliff would still be a problem even if Romney had been elected.
“The whole argument (that Romney would have been better for business than Obama) assumes that the president runs the whole government,” he said. “But that’s not true. You’ve got a House. You’ve got a Senate. And it’s divided between the parties. It’s not as if one guy can do this on his own, whether it’s Romney or Obama.”
Concerning the cost of health care reform, Brock said: “I think that is a problem with the (Patient Protection and Affordable Care Act) because it drives up costs for businesses that employ more than 50. But that can be fixed. It’s not as if it’s set in concrete for all time.”
He said the biggest roadblock to continued economic recovery is political in-fighting.
“We need to get people from both parties to sit down and act like grownups and figure out what needs fixing, rather than political posturing,” he said. “I think if Obama and people in Congress can get together and come to some kind of resolution of this, then the business concerns will be a lot less.”
“I will not invest into the unknown. Our leaders need to give us a believable and predictable path so that we feel comfortable that our investments are reasonably secure.”
Dave Dysinger, president of Dysinger Inc.
“No matter what the conditions are, we can develop a business plan to operate in that environment. But when you can’t predict the future accurately, it makes it pretty tough.”
Henry Dean, vice president of operations, Boston Stoker.
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