We’ve heard loud and clear from lawmakers, Wall Street executives, economists, business leaders and think tanks that the fiscal cliff poses a serious threat to the economy, and now the nation’s big city mayors are weighing in.
Last week, members of the U.S. Conference of Mayors gathered in Washington to caution that – unless blocked – massive spending cuts scheduled to take effect in early January pose the “biggest threat to our metro economies.”
The bipartisan group of 1,296 mayors from cities with populations above 30,000 met with Vice President Joe Biden, as well as House Minority Leader Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., to voice concerns that the $54 billion of non-defense discretionary spending cuts next year would threaten social programs, while the expiration of Bush-era tax cuts and other tax laws would hurt the ratings of municipal bonds.
According to the group, American cities house 84 percent of the nation’s population, and provide 86 percent of its jobs, and account for 90 percent of its GDP. “Cities and metro areas are the economic engines,” says Michael Nutter, the mayor of Philadelphia and president of the Conference of Mayors. “We are the economy of the United States of America.” - Read more at Time
OBAMA REACHES OUT TO WALL STREET President Obama extended an olive branch to several Wall Street executives over the weekend, after being harshly criticized by the financial sector for not inviting CEOs from the top financial houses and banks to a fiscal cliff meeting last Wednesday with other business leaders. According to Reuters, the president called from Asia to placate Jamie Dimon, JP Morgan Chase’s outspoken CEO, Apple’s CEO Tim Cook, Boeing's Jim McNerney, Costco's Craig Jelinek and billionaire investor Warren Buffett.
"The president reached out to and spoke with each of these business leaders as a part of his continuing conversations and outreach on the need to find a balanced deficit-reduction solution that protects the middle class and continues to move our economy forward," a White House official said. - Read more at The Fiscal Times
FISCAL CLIFF CONTINUES TO WEIGH ON INVESTMENTS Uncertainty surrounding the fiscal cliff has U.S. companies scaling back investment plans at the fastest pace since the recession, the Wall Street Journal reports. More than half of the 40 largest publically traded corporate spenders said they will curtail capital expenditures this year or next.
Executives, wary of what might happen to the economy if the White House and Congress fail to reach an agreement before the end of the year, say they are slowing or delaying big projects to protect profits. This comes amid declining demand and rising uncertainty, since companies say, if the fiscal cliff is not resolved, the economy will tumble back into a recession.
"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." - Read more at The Wall Street Journal
GOLDMAN: CLIFF WON’T HAPPEN Goldman Sachs analysts anticipate that lawmakers and the president will cut a deal before the end of the year to avoid the fiscal cliff. “We believe the ‘fiscal cliff’ ultimately will be avoided, but precedent suggests any resolution will not happen until mid- to late-December. Last year, S&P 500 fell by 17 percent in two weeks as the U.S. debt ceiling deadline approached. History also suggests the market has downside risk in December from the pending hike in capital gains taxes,” the analysts wrote in a note on Sunday.
ANOTHER UNEMPLOYMENT BENEFIT EXTENSION? Groups advocating for low-wage workers last week urged Congress and the administration to extend the expiring unemployment insurance benefits. Advocates including the National Employment Law Project said that more than 2 million people stand to lose benefits, potentially costing the economy 400,000 jobs.
The NELP held more than 40 meetings with lawmakers last week to make their pitch for a $30 billion extension of the unemployment benefits program, according to The Hill.
Though the groups face an upward battle getting the benefits extended at a time when Congress is looking for ways to reduce the budget deficit, they have some support from ranking members of Congress. Sen. Chuck Schumer, D-N.Y., a member of the Senate Democratic leadership, told The Hill that stimulus measures should be included in any deficit-reduction package.
NELP and other groups are pressing Congress to pass a one-year extension of legislation that was approved last February. The extension would provide a maximum of 47 weeks of federal benefits for those who have been unemployed for more than six months and have exhausted their state unemployment benefits. - Read more at The Hill
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