In his new role as chief executive officer of the Financial Services Roundtable, former Minnesota Governor Tim Pawlenty wrote to to Congress and President Obama on Thursday, urging them to find a way to “bridge over” the fiscal cliff to buy time to deal with the deficit next year.
Pawlenty said the uncertainty over what Congress and the White House will do to prevent huge tax increases and spending cuts from automatically taking effect early next year has already harmed the economy. He cited, for example, that hiring plans at 61 percent of JPMorgan’s U.S. clients have been affected by the lack of clarity.
“The fiscal cliff is imposing a negative drag on business lending, hiring, spending, and investment right now, despite the actual ‘cliff’ being over two months away,” Pawlenty said in the letter. “We urge you to bridge over the fiscal cliff and to do so as soon as possible.”
Pawlenty had announced in September that he was leaving his post as national co-chairman of Mitt Romney’s presidential campaign to lead the financial lobbying group. Today was officially his first day in the new job, but the letter was not the financial industry’s first call for action on the fiscal cliff. Some of the executives Pawlenty now represents previously warned Congress in a letter last month that a failure to address the nation’s $16 trillion debt before the end of the year could be devastating to the country’s business climate:
“The consequences of inaction – for stability in global financial markets, for economic growth, for millions of Americans still without work, and for the financial circumstances of American businesses and households – would be very grave.”
Both Fitch Ratings and Moody’s Investors Service warned that going over the cliff could mean another downgrade in the nation’s credit rating , causing businesses to worry about higher interest rates. They said that “would likely increase uncertainty and instability in global financial markets.”
President Obama and Republican challenger Mitt Romney have both hinted at some form of deficit reduction plan. However, as The Fiscal Times reports today, “The nature of any compromise, whether reached during the lame duck or early next year, will depend entirely on the shape of the new Congress and who wins the White House.”
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