Democratic and Republican policy makers returned to Washington, D.C. on Tuesday with just seven weeks left to come up with some sort of compromise. If the two opposing sides fail to reach an agreement and the nation falls off the cliff, a recession in 2013 is guaranteed, the Congressional Budget Office has warned on a number of occasions.
Negotiations with congressional leaders will convene Friday.
But while Washington takes its time to argue over the fiscal cliff, businesses can't wait any longer.
Their impatience was highlighted in recent advertisements by the Business Roundtable, where they tell Congress it's time to act.
In one ad, Honeywell International Inc. (NYSE: HON) Chair and CEO David Cote jumps to the point: "If the last debt ceiling was playing with fire," he asserts, "this time they're playing with nitroglycerin."
Fiscal Cliff Effects Already HereCompanies are urging action because the effects from fiscal cliff anticipation are already being felt, according to Bank of America Corp. (NYSE: BAC) CEO Brian Moynihan Tuesday at an investors conference.
Companies have implemented hiring freezes and scratched expansion efforts. And individuals have become increasingly frugal with their spending habits as they await what could be the biggest ever tax increase on Americans.
"That uncertainty continues to hold back the recovery," CEO Moynihan stressed to his peers and a group of concerned market participants.
According to BofA's survey of chief financial officers, "the number one issue they see is the fiscal cliff."
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Moynihan noted that his bank's clients are holding off making investment decisions until they are afforded more clarity on the situation.
Sharing Moynihan's views is Lloyd C. Blankfein, CEO of investment powerhouse Goldman Sachs Group Inc. (NYSE: GS).
Speaking of the impending fiscal cliff, Blankfein shared the following at Tuesday's conference: "Whether or not it gets resolved-which I believe it will-we're going to have uncertain moments and insecurity between now and then, which will roil the markets. My best guess-it might not turn out this way-but we are at least braced for a ride here."
That's why President Obama is meeting with big business CEOs today to hear their fiscal cliff concerns. Those expected to attend include General Electric Co. (NYSE: GE) CEO Jeffrey Immelt and American Express Co. (NYSE: AXP) CEO Kenneth Chenault.
If U.S. lawmakers can come to terms before Dec. 31, a Santa Claus rally may deliver what is on investors' wish lists. But if no fiscal cliff resolution arrives before the New Year, look for a possibly violent market reaction.
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