Most Americans have been working on the assumption that Congress has to be bluffing about the Fiscal Cliff because there’s no way on earth even the most daft of political hacks would be foolish enough to destroy the U.S. economy through pig-headed obstinance and mindless sucking up to extreme fringes on either side of the political aisle. (See Related: Fiscal Cliff: “Major Market Meltdown” Expected If Congress Does Nothing, Says Steven Rattner)
At least that was the thinking until about a month ago. With the election nearing and neither sign showing any sign of budging, concern has climbed from punditry to the corner office. Over 80 CEOs of a campaign called “Fix the Debt” are calling for DC to stop bickering along party lines and get serious about putting the U.S. on a sustainable path. (See Related: CEOs Launch Campaign to Get Congress to Finally Fix the Deficit)
Is the movement just political posturing by the quintessential members of the 1% or an expression of genuine concern? Mark Lehmann, president of JMP Securities thinks it’s the latter. “They’re angry and I don’t blame them,” he states.
The CEOs are ticked and concerned but they aren’t entirely closing up shop. Lehmann says it’s incremental spending on new projects and initiatives that is getting frozen, not core operations. “They’re not stopping business; phones are getting picked up, people are on airplanes,” he explains.
Lehmann still believes a compromise will be reached. Compromise means that taxes are going higher and spending will be cut. We’re all just going to have to deal with that basic fact then hammer out some details. He thinks there’s haggling going on behind the scenes as each side strives to avoid going down in history as the group that plunged the U.S. into a financial crisis because they couldn’t agree. (See Related: Market Looks Bad in 2013 No Matter Who Wins Says Hirsch)
Breakout viewers might remember that the same type of backroom dealing was going on during the debt ceiling debate to no avail. That was then, this is now and the deadline is real. “This is the final time”, says Lehmann. “We can’t wait any further.”