Another deadline, another Congressional stalemate. This time it’s the fiscal cliff and the possibility of sequestration. Congress recessed without addressing this issue and the expectation is that some sort of agreement will be hammered out during the lame duck session of Congress before January.
To be sure, there is movement in this area – a bipartisan group of Senators have been at work at such a proposal, but true to form Congressional leaders of the respective Republican and Democratic parties distanced themselves from these talks. There are also plans underfoot for a possible temporary extension of the current tax and spending regime by three to six months.
However, as The Hill notes, this will wreck havoc with the Internal Revenue Service, to say nothing of taxpayer’s planning and accounting bills. It is little secret that Congress has been set in default mode — deny, deny, deny the other side any type of concession no matter what the cost – for some time.
People have learned to tune out much of this posturing and assume that Congress will pull it together at the last minute. However, this game is wearing thin. One sign is a recent American Institute of CPA survey that shows CFOs are feeling relatively sanguine about their own business prospects–but pessmimistic about the general economy.
“Executives are mired in uncertainty,” Arleen Thomas, AICPA’s senior vice president for management accounting, said when announcing the results. “Many are guardedly optimistic about their own businesses but unsure about the political, regulatory and economic landscape around them. That is driving a pessimistic sentiment that is keeping the brakes on hiring and expansion.”
Although the focus of the economy recovery has been on jobs for much the election, there has been some attention paid to the regulatory and tax uncertainty and inability to plan. It hasn’t been enough though–enough attention paid, that is. Companies are stilling on significant amounts of cash waiting for a sign–not just of recovery but of a sane Washington.