Cliff Notes: The Joy Luck Club

Cliff Notes: The Joy Luck Club

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Cliff Notes: The Joy Luck Club

After meeting with President Obama last week, Congressional leaders attempted to inject a new tone of hope and optimism into the fiscal cliff negotiations — and this time, they’re promising not to take American to the brink of the December 31st deadline.  But with Washington facing the same “familiar hurdles” that led to the sequestration in the first place, not everyone is resting easy.   As lawmakers kick back for the extended holiday, many business owners and investors are bracing for failure.

Congressional Leaders Express Optimism – Business Community Takes Cover

While Administrations And Congressional Leaders Express Optimism On Fiscal Cliff Negotiations, Business Leaders Prepare For The Worst:

Bloomberg: “Congressional Leaders Optimistic About Averting `Fiscal Cliff’” (Mark Silva, “Congressional Leaders Optimistic About Averting `Fiscal Cliff’,” Bloomberg, 11/19/12)

“Congressional leaders emerged from talks with President Barack Obama at the White House this morning voicing confidence in solving the budgetary and tax questions needed to avert a ‘fiscal cliff’ before year’s end.” (Mark Silva, “Congressional Leaders Optimistic About Averting `Fiscal Cliff’,” Bloomberg, 11/19/12)

Harry Reid “Very Comfortable” Congress Won’t Take “Fiscal Cliff” Talks To The Brink. “We feel very comfortable with each other, and this isn’t something we’re going to wait until the last day of December to get it done,” Reid said, offering some hope of not taking the talks to the brink of the Dec. 31 deadline when automatic spending cuts kick in and when Bush-era tax cuts expire. (Mark Silva, “Congressional Leaders Optimistic About Averting `Fiscal Cliff’,” Bloomberg, 11/19/12)

Roll Call: “Fiscal Cliff Talks Kick Off On Optimistic Note” (Steven T. Dennis, “Fiscal Cliff Talks Kick Off On Optimistic Note,” Roll Call, 11/16/12)

Talks to avert the year-end fiscal cliff began on a hopeful note at the White House Friday, with the top Democratic and Republican leaders leaving an hour long meeting with President Barack Obama expressing confidence that they can reach a deal and work toward a compromise marrying new revenue with spending cuts in the coming weeks.” (Steven T. Dennis, “Fiscal Cliff Talks Kick Off On Optimistic Note,” Roll Call, 11/16/12)

Speaker Boehner:  “’I believe that we can do this and avert this fiscal cliff,’ Boehner told reporters outside the White House. (Steven T. Dennis, “Fiscal Cliff Talks Kick Off On Optimistic Note,” Roll Call, 11/16/12)

Associated Press: “Hill Leaders Voice New Confidence In Deficit Deal” (David Espo, “Hill Leaders Voice New Confidence In Deficit Deal,” The Associated Press, 11/16/12)

Meanwhile, Business Owners And Investors Are Preparing To Shield Themselves From The Fallout:

Business Owners And Investors Are Rapidly Maneuvering To Shield Themselves From The Prospect Of Higher Taxes Next Year, A Strategy That Is Sending Ripples Across Wall Street And Broad Areas Of The Economy.In my 30 years in practice, I’ve never seen such a flood of desire and action to transfer a business and cash out,” said Kenneth K. Bezozo, a partner in New York with the law firm Haynes and Boone. “We’re seeing a watershed event.” (Nathaniel Popper and Nelson D. Schwartz, “Investors Rush to Beat Threat of Higher Taxes,” New York Times, 11/18/12)

Corporate Executives Say They Are Slowing Or Delaying Big Projects To Protect Profits Amid Easing Demand And Rising Uncertainty. “The whole world is looking for stability and clarity from the United States,” said David Seaton, chief executive of Fluor Corp., a large engineering and construction firm. If uncertainty isn’t removed, he said, “People will sit on their war chests of cash and return it to shareholders. You’ll have a retarded growth trajectory.” (Sudeep Reddy and Scott Thurm, “Investment Falls Off a Cliff,” Wall Street Journal, 11/18/12)

Nearly Three-Quarters Of The Chief Executives Attending The Event Listed The Fiscal Cliff As Their Biggest Worry On The Global Landscape—Above Europe’s Financial Troubles, A China Growth Slowdown And Uncertainty Over Conflict In The Middle East. “Going off the fiscal cliff would create a period of financial and economic instability,” the CEOs said in an action item they adopted as their top priority. They urged President Obama and Congress to “take advantage of the chance for a grand bargain” on tax and spending issues “so businesses and consumers can plan for the long term.” (Alan Murray, “CEOs to Washington: Strike a Deal – and Do It Now,” Wall Street Journal, 11/19/12)

Corporate America Is Raising The Volume Of Its Plea That The U.S. Government Avert A Year-End “Fiscal Cliff” That Could Send The Nation Back Into Recession. “If the last debt ceiling discussion was playing with fire, this time they’re playing with nitroglycerin,” [Honeywell CEO David] Cote said in an interview. “If they go off the cliff, I think it would spark a recession that’s a lot bigger than economists think. Some think it would just be a small fire. I think it could turn into a conflagration.” (Scott Malone, “Congress, Obama Playing With Dynamite, CEOs say of ‘Fiscal Cliff’,” Reuters, 11/13/12)

“We simply won’t be investing in the United States. We will be investing elsewhere where we have more certainty of the outcome,” Duncan Niederarur, CEO of NYSE Euronext, said in an interview. (Scott Malone, “Congress, Obama Playing With Dynamite, CEOs say of ‘Fiscal Cliff’,” Reuters, 11/13/12)

CEOs are not alone in this worry. The CBO report warned that failure to reach a deal could push the U.S. unemployment rate up to 9.1 percent, the highest since July 1991. It is currently 7.9 percent. (Scott Malone, “Congress, Obama Playing With Dynamite, CEOs say of ‘Fiscal Cliff’,” Reuters, 11/13/12)

Wall Street Journal: “States Brace For Possibility That Fiscal Cliff Isn’t Averted” (Mark Peters, Douglas Belkin and Josh Mitchell, “States Brace For Possibility That Fiscal Cliff Isn’t Averted”, Wall Street Journal, 11/16/12)

State budget chiefs have begun setting aside money and looking for programs they can quickly scale back if leaders in Washington fail to reach a deal to avoid sending the economy over the so-called fiscal cliff. The challenge is particularly acute in parts of the nation that are highly dependent on federal dollars, from communities with military bases to counties in the Washington beltway.” (Mark Peters, Douglas Belkin and Josh Mitchell, “States Brace For Possibility That Fiscal Cliff Isn’t Averted”, Wall Street Journal, 11/16/12)

Businesses Have Held Back On Buying Capital Goods Until The Outcome Of Negotiations In Washington Becomes Clear. “The impacts of the potential cliff are already being felt,” Brian T. Moynihan, CEO of Bank of America Corp.’s, said. In the bank’s survey of chief financial officers, “the number one issue they see is the fiscal cliff. They tell us it’s affecting their business plan. That uncertainty continues to hold back the recovery. Simply put, our clients tell us they will not be aggressive in times of uncertainty.” (Hugh Son, “BofA Chief Moynihan Says Fiscal Cliff Already Hurts Economy,” Bloomberg, 11/13/12)

Jamie Dimon: CEOs Already Cutting Back Due To The Fiscal Cliff.  “[The fiscal cliff] alone would take 3 percent or so out of (gross domestic product), that is a recession,” he said. “The problem is that’s kind of a static analysis, people’s reaction could actually make it worse… “A fiscal cliff and another recession would be terrible for America, we should do everything we can to avert something like that. So it’s not about JPMorgan. It’s about what’s right for the country.” (Deepanshu Bagchee, “Dimon: CEOs Are All Telling Me the Same Thing,” Business Insider, 10/27/12)

Congress Is Still Facing The Same “Familiar Hurdles” That Led To The Sequester In The First Place

New York Times: “At Bipartisan Budget Meeting, Familiar Hurdles But A New Attitude” (Jackie Calmes and Jonathan Weisman, “At Bipartisan Budget Meeting, Familiar Hurdles But A New Attitude,” New York Times, 11/16/12)

“President Obama and Congressional leaders on Friday reopened budget negotiations that ended badly in 2011 with surprising bipartisan bonhomie, and even some initial agreements toward a year-end deal. Yet a familiar hurdle remains before any handshakes: resolving the parties’ dispute over whether to extend the Bush-era tax rates for the wealthy.” (Jackie Calmes and Jonathan Weisman, “At Bipartisan Budget Meeting, Familiar Hurdles But A New Attitude,” New York Times, 11/16/12)

May 2011: “Taxes Remain Sticking Point In Budget Talks.” (Richard Cowan, “Taxes Remain Sticking Point In Budget Talks,” Reuters, 5/13/11)

November 2012: “Tax Rates Are Main Sticking Point On Reaching ‘Fiscal Cliff’ Deal.” (Andrew Taylor, “Tax Rates Are Main Sticking Point On Reaching ‘Fiscal Cliff’ Deal,” The Associated Press, 11/9/12)

And Despite New Warnings From The CBO, The Real Issue Of Overspending Is Being Overlooked

“CBO: Debt poses greater long-term economic threat than fiscal cliff” (Joel Gehrke, “CBO: Debt poses greater long-term economic threat than fiscal cliff,” The Washington Examiner, 11/16/12)

“Lawmakers wrangling over ‘fiscal cliff’ negotiations may have a bigger problem on their hands over the next decade, as the current rate of federal spending could drive the United States into a fiscal crisis, according to the Congressional Budget Office.” (Joel Gehrke, “CBO: Debt poses greater long-term economic threat than fiscal cliff,” The Washington Examiner, 11/16/12)

CBO: Economic Effects of Policies Contributing to Fiscal Tightening in 2013

“[I]f the fiscal tightening was removed and the policies that are currently in effect were kept in place indefinitely, a continued surge in federal debt during the rest of this decade and beyond would raise the risk of a fiscal crisis (in which the government would lose the ability to borrow money at affordable interest rates) and would eventually reduce the nation’s output and income below what would occur if the fiscal tightening was allowed to take place as currently set by law.” (Congressional Budget Office, “Economic Effects of Policies Contributing to Fiscal Tightening in 2013,” 11/8/12)

A former U.S.Marine, he is the Creator of The Minority Report Network. He is also the Founder and Managing Editor of the Network’s flagship site, www.theminorityreportblog.com, Former Director of New Media for Liberty.com, Former Director of New Media for Liberty First PAC, and the Former Chief Managing Editor of 73Wire.com. Steve is a well respected national conservative blogger who’s dedicated the past several years of his life advancing conservatism online. Recently Steve was instrumental in the development of Liberty.com, Liberty First PAC, The Patriot Caucus, the national campaign trail and grassroots news site73wire.com.