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Manufacturers Face Looming Fiscal Abyss

Manufacturers Face Looming Fiscal Abyss

Everyone is talking about manufacturing. With the presidential elections rapidly approaching, the national conventions are sure to be alive with candidates eagerly touting their platforms and rallying their supporters. In addition to the presidential race, many other campaigns are in full swing for open seats at the federal, state and local levels. One thing is for certain: manufacturing is front and center in this year’s elections. Members of Congress on both sides of the aisle and candidates across the country are highlighting the importance of manufacturing to our economic recovery. We need to keep manufacturing at the forefront of the political and policy debates. This is the perfect time for manufacturers to tell lawmakers that we need action now.

Manufacturers in the United States are facing countless threats to their competitiveness, and the future of the manufacturing sector remains uncertain. A slew of damaging regulations threaten to cripple manufacturers’ ability to compete in the global marketplace, and a number of job-killing tax proposals are set to take effect at the end of the year, stifling manufacturers ‘ability to grow their businesses and innovate. The “fiscal abyss” looms large, endangering manufacturing jobs across the country.

“As we careen toward the fiscal abyss created by sequestration, taxmageddon, regulatory overreach, entitlement burdens and overall uncertainty, too many employers are simply staying above water,” said National Association of Manufacturers (NAM) President and CEO Jay Timmons.

It’s understandable that manufacturers are increasingly nervous about the fiscal abyss that looms ahead. Economic growth is slowing. Unemployment remains stuck at 8.2 percent. The Bureau of Economic Analysis announced that real gross domestic product (GDP) only rose 1.5 percent in the second quarter, a sharp decline from the 4.1 percent and 2 percent growth rates experienced in the two prior quarters, respectively.

The most recent NAM/IndustryWeek quarterly survey found that two-thirds of manufacturers still cite an unfavorable business climate as their top challenge, up from 62 percent in March’s survey, with taxes and overregulation high on manufacturers’ list of concerns. June’s survey showed more than 83 percent of manufacturers had a positive outlook for their companies, down 5 percentage points from the first-quarter survey. These findings suggest that manufacturers’ uncertainty is increasing surrounding the impact of tax and regulatory policies they will face in 2013 and beyond.

As we continue to count down the days to the elections, there’s plenty that manufacturers can do to tell candidates that manufacturing means jobs. It’s critical that elected officials and candidates hear from you on how Washington’s policies affect manufacturing and how to advance a pro-growth, pro-business agenda. Set up a meeting with your lawmakers at their district office or invite them for a plant tour of your company. These are perfect opportunities for them to hear how damaging regulations and high taxes are slowing growth and costing manufacturing jobs. The NAM’s Manufacturing Works web page provides all the tools you need.

For example, manufacturers must tell Congress about the proposed defense spending cuts under the Budget Control Act and the harmful impact they could have on manufacturing jobs and economic growth. The NAM’s Defense Spending Cuts: The Impact on Economic Growth and Jobs shows that more than 1 million jobs in the private sector, including 130,000 manufacturing jobs, will be lost by 2014 if the government carries out its proposed defense cuts. This will increase the unemployment rate by 0.7 percent and decrease GDP by nearly 1 percent by 2014. These spending cuts will be particularly harmful to a wide range of manufacturing industries that are direct and indirect suppliers of defense equipment and supplies.

National media outlets such as The Washington Post and The Wall Street Journal have highlighted the devastating impact of the defense cuts outlined in the NAM’s report. Last month, Timmons met with manufacturers in North Carolina, where the state stands to lose more than 34,000 jobs by 2014. The NAM also set up a resource web page for manufacturers with links for more information.

Taxes are another issue of great significance for manufacturers. On January 1, absent congressional action, a number of damaging tax increases will take effect, including individual tax rates on small and medium-sized manufacturers, as well as on capital gains and dividends. These tax increases will significantly impact economic growth and manufacturers’ competitiveness, devastating our still fragile economy.


Dorothy Coleman, NAM vice president of tax and domestic economic policy, along with NAM Chief Economist Chad Moutray, co-wrote an op-ed for The Washington Post highlighting the uncertainty manufacturers face with looming tax increases and the pending fiscal abyss. Congress needs to extend the current tax rates and revive the tax extenders for our nation’s manufacturers. Doing so would help set the stage for comprehensive tax and entitlement reform. Manufacturers need a tax code that creates jobs, encourages investment, enables innovation and ensures our global competitiveness. Congress must make hard choices on our nation’s spending, and tackling tax and entitlement reform is the only way to address our debt and get our nation’s fiscal house in order.

But it’s not just Washington’s out-of-control spending and potential skyrocketing taxes that can thwart a robust and healthy manufacturing sector. A number of regulations are negatively affecting the industry.
On health care, the NAM strongly opposed the Supreme Court’s decision on the Affordable Care Act. With the Court’s decision, manufacturers can expect to shell out more money on rising health care costs and increased taxes. The NAM key voted in favor of repeal and held a tele- conference on June 28 with nearly 800 members analyzing what the ruling means for manufacturers and their employees.

On energy regulations, the NAM continues to battle the Environmental Protection Agency’s (EPA) aggressive regulatory agenda on issues such as greenhouse gases and Boiler MACT. Last year, the NAM created the No New Regs campaign to urge lawmakers to pursue legislation that protects the environment and increases access to affordable domestic energy. The NAM continues to fight against proposed federal regulations of shale gas as the states already effectively monitor drilling. The NAM also continues to strongly advocate for the creation of the Keystone XL pipeline, which would improve our energy security and create tens of thousands of jobs; however, the Obama Administration continues to exhibit a “some-of-the-above” energy policy, hurting job creation and stifling growth.

It’s more critical than ever that Congress hears from you on how these damaging regulations, burdensome mandates, crippling tax increases and proposed defense cuts negatively impact your business. Other countries are moving forward with policies that make their businesses more competitive, and we need to do the same. Visit www.manufacturingworks.nam.org to get started today.

Aric Newhouse is NAM senior vice president for policy and government
regulations.