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The
Hill
Businesses
demand debt-limit hike as part of deal on ‘fiscal cliff’
By Peter Schroeder
11/23/12
Businesses want Washington to increase the U.S. debt limit as part of a
package to avoid the “fiscal cliff,” thus averting two crises in one go.
But conservative Republican lawmakers would cry foul. For, while
corporate America wants to head off market turmoil and the economic
uncertainty that debt-limit drama might bring, Republicans want to use
the threat of a debt-limit standoff to extract the biggest spending
cuts possible.
The Treasury Department says the government will reach its $16.4
trillion borrowing limit by the end of the year. But “extraordinary
measures” could delay the need for a new, higher, limit until early
2013.
Businesses and Wall Street want Washington to fix the issue well before
that. Specifically, they want Congress to agree on a lame-duck package
that avoids the automatic spending cuts and tax hikes dubbed the
"fiscal cliff" and provides a framework for a broader deficit reduction
deal next year. At the same time they want to prevent 11th-hour
brinksmanship of the sort that triggered a U.S. credit downgrade in the
summer of 2011.
“The downside risk here is significant if we don’t include it,” said
Rob Nichols, president and chief executive officer of the Financial
Services Forum; “It’s very sensible to include that, so we don’t roil
the global capital markets any further.”
The U.S. Chamber of Commerce, the nation’s largest business lobby,
agrees. While not explicitly demanding a debt-limit hike be part of
fiscal-cliff talks, it says it's the perfect place to do just that.
Washington is expected to hammer out an agreement to avoid the cliff
and also establish a framework for broader fiscal reforms, including
tax reform, that could be accomplished in coming months.
Ken Bentsen, head of the Washington office at the Securities Industry
and Financial Markets Association (SIFMA), says tackling the debt limit
now would let the next Congress get to work on those big projects.
“As a practical matter, it would make sense to wrap it in,” he said.
“You could move on to deal with tax reform and fiscal reform and all
other things … and not have this looming cataclysmic event hanging over
you.”
Negotiations in 2011 produced one of the most protracted and dramatic
fights of the 112th Congress. The drama ended with a deal only hours
before the government would have run out of money to pay its debts.
The political brinksmanship roiled markets and led to the first-ever
downgrade of America’s credit rating.
Read the rest of the article at The Hill
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