While Washington is Away
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While Washington is away during its August recess, the spending and fiscal issues Congress left on the table are causing trouble in private industry. According to an article today by the Wall Street Journal, a large number of companies have been holding back on spending their own capital due to political battles in Washington.
Those mentioned in the article pointed to the looming fiscal cliff, growing uncertainty of spending cuts and an inability of politicians to compromise on even the most basic of issues. Paul Diaz, Chief Executive of Kindred Healthcare Inc., says, “If you can’t plan, you don’t spend. And if you don’t spend, you don’t hire.” Mr. Diaz’s comments in fact make the case that Federal Reserve Chairman Ben Bernanke has been making since talk of the fiscal cliff began: “The most effective way that the Congress could help to support the economy right now would be to work to address the nation’s fiscal challenges in a way that takes into account both the need for long-run sustainability and the fragility of the recovery,” said Chairman Bernanke at a July Senate Hearing.
Unfortunately, even upon the return from the August recess, not much is expected from Congress until after the elections. The question is if it will be too late by then?