Manufacturers Sound Off on Fiscal Challenges

Sept. 9, 2013
Long-term budget deal at top of list of challenges facing lawmakers, according to NAM/IndustryWeek Q3 Survey of Manufacturers.

1. Policymakers have made almost no progress in resolving budget fundingfor the government for fiscal 2014, the across-the-board federal spending cuts (sequestration) and the need to increase our borrowing authority. How important is it to your company for policymakers to address the nation’s fiscal challenges in a timely and responsible fashion?

          a. Extremely important – 60.6%
          b. Moderately important – 29.7%
          c. Little or no impact – 6.8%
          d. Uncertain – 2.9%

2. What do you see as the top challenges for policymakers over the next 12–18 months? (Respondents were able to check more than one response; therefore, responses exceed 100%.)

          a. Slowing the growth of entitlement spending – 74.5%
          b. Finding a long-term federal budget deal that tackles the deficit/debt – 84.9%
          c. Passing comprehensive tax reform – 66.2%
          d. Ending expansionary monetary policy actions – 33.8%
          e. Reducing the regulatory burden on manufacturers and other businesses – 79.1%
          f. Expanding economic opportunities with more trade agreements – 22.3%
          g. Implementing a true “all-of-the-above” energy policy – 41.4%
          h. Controlling rising health care costs – 74.5%
          i Addressing the skills gap facing manufacturers – 35.3%

3. This fall, the tax-writing committees in both the House and Senate are expected to draft comprehensive tax reform plans. It is expected that both will lower tax rates and “broaden” the income tax base by eliminating many deductions, credits and other tax incentives. There may also be changes to the way the federal government taxes overseas income. Even if a tax reform plan is “revenue neutral,” it is likely that some businesses will see their tax burden increase under a reform plan. How important is enactment of a comprehensive tax reform plan to your business?

          a. Very important – 34.7%
          b. Moderately important – 45.8%
          c. Not important – 12.3%
          d. Would prefer the status quo – 7.2%

4. It is widely expected that the Federal Reserve Board will begin to “taper” or reduce its long-term and mortgage-backed security purchases this fall, perhaps as soon as its September Federal Open Market Committee meeting. Moreover, all asset purchases are anticipated to stop by mid-2014, ending the third round of quantitative easing. Does the prospect of slowing or ending these asset purchases impact your business operations and planning?

          a. Yes – 16.5%
          b. No – 47.3%
          c. Uncertain – 36.2%

5. The Federal Reserve has increased the size of its balance sheet from less than $1 trillion before the financial crisis to roughly $3.5 trillion today. At some point, the Federal Reserve will begin to reduce its holdings. On a scale from 1 to 10, how worried are you about the Federal Reserve’s exit strategy? (1 = not worried at all; 10 = extremely worried)

           Average score = 6.0

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