Business groups split on debt

Last modified: 7/22/2011 12:00:00 AM
Business groups in New Hampshire are divided on the need to raise the nation's debt limit before a deadline early next month.

The president of the statewide Business and Industry Association said yesterday that the debt ceiling must be raised to reduce uncertainty for businesses, while the state director of the National Federation of Independent Business said his organization opposes allowing the government to borrow more money for the same reason.

The Treasury Department has said the federal government will hit its debt limit Aug. 2, and lawmakers in Washington are trying to craft a deal that would cut future deficits enough to win the support of lawmakers disinclined to authorize more borrowing.

When asked how Washington negotiators should resolve the impasse, BIA President Jim Roche said 'the resolution is that the debt ceiling is raised.' The BIA has no stance on how lawmakers should do it. But until the limit is raised, he said, businesses in New Hampshire are unlikely to add jobs.

'To not raise the debt ceiling would, in my view, put the economy back into recession and dislocation, and that's not good for anyone,' Roche said.

Small businesses belonging to the NFIB have opposed raising the borrowing limit, said state director Bruce Berke. A possibility of higher interest rates concerns members less than their expectation that more government borrowing would lead to higher taxes, he said.

'We just don't want to continue the path of spending our way out of a recession,' Berke said. 'That's why they don't want the debt ceiling raised. By doing that, that debt will eventually come back to the small business owners, among others.

At Altus Investment Group, a brokerage firm in Concord, President David Woolpert said clients have asked in the last week what to do about the possibility the nation will hit its debt ceiling. Woolpert said he responds that a failure to raise the debt limit might not have a severe immediate impact but would hurt the U.S. economy for years to come.

'It doesn't matter if it's one minute or one hour,' he said. 'If just one bond doesn't get redeemed adequately, properly, for the full amount the day it matures, then that's it. For the next 30 to 50 years, people would say, well you can't be sure what's going to happen to a U.S. Treasury bond.'

The lack of resolution has unsettled his clients, Woolpert said, increasing the likelihood they'll make poor investment decisions. Any damage to their investment portfolios would hurt his business as well, since most of his income is tied to the growth of invested assets.

One deficit-cutting plan proposed by a bipartisan group of senators has gained traction in that chamber. U.S. Sen. Jeanne Shaheen has signed on to the proposal by the so-called Gang of Six, and yesterday she held a conference call with New Hampshire business leaders to support raising the limit. Shaheen said failing to do so would have a 'potential catastrophic impact' on families and businesses in New Hampshire and across the country.

The chief economist for the U.S. Chamber of Commerce told participants on the call of consequences if the government cannot pay its bills: higher interest rates for people paying mortgages and businesses borrowing, a noticeable drop in the value of the dollar, a rise in the price of oil.

'These things are all going to happen fairly quickly if we go into a default,' said economist Marty Regalia. 'Everyone that's involved in the financial markets here and around the world has made it clear this would not be something we should enter into in any kind of cavalier fashion.'

Two New Hampshire businessmen on the call said they worried a failure to raise the debt limit would jeopardize demand for their products. Peter Amos, senior vice president of Warner Power, which makes electrical equipment, said his company has rebounded since losing more than half its business after the collapse of the investment bank Lehman Brothers in September 2008.

'Should the default happen, I think we're going to face certainly a new recession,' he said. 'And it won't just be in the United States, it will be globally.'

Al Wasserzug, director of business development for Vulcan Flex Circuit Corp. in Londonderry, said the debt ceiling question has added to uncertainty in the markets. He gave the example of a customer who recently asked for the price of 5,000 units of a product but ordered only 500 units.

At the Greater Concord Chamber of Commerce, which does not take positions on federal issues, President Tim Sink said yesterday that businesspeople are watching negotiations in Washington with opinions that run the political spectrum.

'I'm hearing everything, ranging from 'Yes, we must raise the debt ceiling or the consequences will be completely dire,' ' he said. 'And I've heard the opposite end of the spectrum of a level of skepticism that the end of the world will come if we don't raise the debt ceiling.'

(Karen Langley can be reached at 369-3316 or klangley@cmonitor.com.)




Concord Monitor Office

1 Monitor Drive
Concord,NH 03301
603-224-5301

 

© 2019 Concord Monitor
Terms & Conditions - Privacy Policy