Businesses Fear Another Hurricane: The Fiscal Cliff

Just like businesses must prepare for a hurricane, they are preparing for the negative effects of the fiscal cliff.

By + More
Workers put up shutters at a local cafe in Key West, Fla., Sunday, Aug. 26, 2012, as the prepare for Tropical Storm Isaac. Isaac gained fresh muscle Sunday as it bore down on the Florida Keys, with forecasters warning it could grow into a dangerous Category 2 hurricane as it nears the northern Gulf Coast.

John Kane is a Job Creators Alliance member and the Founder, Chairman and CEO of the Kane Realty Corporation, a leading East Coast property development company based in Raleigh, N.C.

The economy is in bad shape. And most Americans—six out of 10, in fact—say it's getting worse. Even more shocking, according to Gallup, "Americans have been more likely to say the economy is getting worse than to say it is getting better in every weekly average since Gallup began tracking these measures in January 2008." Basically, it's not getting any better.

And why is that? Perhaps Mother Nature can provide some insight.

Hurricane Isaac dominated headlines this week, along with the Republican National Convention in Tampa, Fla. Isaac not only forced the event's organizers to delay the start and adjust the schedule, it displaced many residents along the Gulf Coast in Louisiana and Mississippi. The images and stories coming out of Tropical Storm-turned-Hurricane-turned-Tropical Storm Isaac were particularly poignant, given the fact that the day Isaac made landfall was the seventh anniversary of one of this nation's most destructive storms: Hurricane Katrina. Not only that, last Friday was the 20th anniversary of Hurricane Andrew, another catastrophic natural disaster.

[See a collection of political cartoons on the economy.]

The legacy of storms like Andrew and Katrina extends far past the immediate physical destruction or human cost; they reshaped the financial landscape as well. A recent special report from the Property Casualty Insurers Association of America found that "economic losses caused by U.S. hurricanes have escalated significantly from the $11.6 billion per year from 1990 to 1995 and now are an astounding $45.1 billion per year." This has significant implications for working families and small businesses in hurricane-prone areas—they have to prepare for the potential disaster by keeping more on their balance sheets and by purchasing things like property-casualty insurance. Smart moves, but it means that there is less disposable capital to deploy for strictly business purposes.

The biggest undercurrent of the coverage of Hurricane Isaac this past week has been one of preparation—and uncertainty. We didn't know beforehand what the impact would be and we don't know now what the extent of the damage is going to be or what will be needed to rebuild. This is simply a daily reality for those who live, work, own, and operate businesses in certain disaster-prone areas.

[See a collection of political cartoons on the budget and deficit.]

But Isaac isn't the only storm brewing that threatens to unleash punishing blows to the bottom lines of small businesses and working families. Job creators must also fear the fast-approaching landfall of another storm, Hurricane Washington, on Jan.1, 2013

Hurricane Washington is paralyzing the private sector with fear about the impact of the impending fiscal cliff: a tidal wave of higher taxes and costly regulations that threaten to overrun businesses the way storms overwhelm levees and flood homes. The source is the reckless government spending that won't be stopped so long as partisan gridlock dominates our nation's capital.

[See a collection of political cartoons on Congress.]

While we are better prepared today to deal with natural disasters like hurricanes, we will never be able to perfectly predict their path. But we do have the ability to change the trajectory of Hurricane Washington. Our elected leaders in Washington need to put aside the political posturing and come together in a bipartisan fashion to pursue progrowth policy that will empower and encourage entrepreneurs, and give job creators the tools they need to succeed in the free enterprise system that undergirds the American Dream.

Reforming the federal tax code in a commonsense way, rolling back the tide of regulatory red tape, and providing certainty on the levels of federal spending and taxation would be significant steps in bringing our economy back from the Great Recession.

  • Who Is to Blame for Washington Gridlock?
  • Check out Economic Intelligence on Twitter at @EconomicIntel.
  • Check out U.S. News Weekly: an insider's guide to politics and policy.