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article imageU.S. manufacturing retracts; 'fiscal cliff' looms

By Larry Clifton     Dec 3, 2012 in Politics
Washington - Monday, the Institute for Supply Management reported that its index of manufacturing conditions dropped to a reading of 49.5, down from 51.7 in October. Any reading below 50 percent indicates a retraction.
October was only the second month since May that manufacturing was up, according to the ISM survey, according to a report.
Meanwhile, the White House remains far away from closing a deal with Republicans that would avert the country falling off a fiscal cliff of tax increases and spending cuts.
Mr. Obama sent Timothy Geithner, secretary of treasury, out with a plan for tax increases that doesn’t address matching spending cuts and Republicans quickly denounced the move as not being a serious proposal.
Making matters worse, devastation in the northeast caused by Hurricane Sandy slowed manufacturing in that region. The storm struck on Oct. 29.
Mr. Obama is betting that his re-election gives him the political punch to raise taxes but leave Republicans to deal with budget cuts to main spending programs like Medicaid and Medicare.
However, approval ratings for Obama remain around 51 percent, and he got one of the smallest post-election poll bumps in modern history.
Businesses are reluctant to expand without knowing their future tax rates. The “fiscal cliff” holds businesses hostage to sharp tax increases and government spending cuts that will take effect in January if the Obama administration fails to strike a budget deal with Congress before then.
The Senate, led by Democrat Harry Reid, hasn’t passed a budget in over three years and has to a large extent left the House of Representatives to deal with the budget crisis.
The House, led by Republican John Boehner, has produced budgets but they are stalled in the Senate and Obama has signaled he would not sign anything the Republicans have submitted to date.
In February or March, the government will likely face another crisis when the debt ceiling must be raised once again to accommodate further deficit spending. U.S. debt reached $16 trillion in the closing months of Obama’s first term.
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