Like the rest of the nation, Schuylkill County business owners remain hopeful that President Barack Obama and Congress can come to a compromise to avoid the "fiscal cliff" before the new year.
"Obviously, we are very concerned about it," Bob Carl Jr., executive director of the Schuylkill Chamber of Commerce, said Monday.
Economists coined the term "fiscal cliff" in recent years to describe the effect a combination of expiring tax breaks, other tax increases and massive federal spending cuts will have on the economy. Under the 2011 Budget Control Act, enacted when a divided Congress could not agree on a plan to reduce deficit spending, the cuts and tax hikes will begin Jan. 2 unless Congress comes up with a plan of its own. According to the Congressional Budget Office, these would suddenly cut $1.2 trillion from the federal budget but could cost millions of jobs and higher taxes may plunge the nation back into a recession.
Carl said the Schuylkill Chamber, along with other chambers and similar organizations nationwide, has been lobbying for a compromise. The Schuylkill Chamber of Commerce is one of 298 signatures from business organizations on a letter to Obama and members of Congress entitled "Multi-Industry Letter regarding America's Impending Fiscal Cliff." It is available at www.friendsoftheuschamber.com.
The letter urges Congress to immediately extend the 2001 and 2003 tax rates and expiring business tax provisions while developing a long-term plan to address the nation's excessive spending.
"Anything that raises the operating cost of a business in Schuylkill County or throughout the nation will prevent it from expanding and growing," Carl said. "If a business can't grow, then it directly affects new jobs as well as preserving existing jobs. Businesses usually have control but when they have very few options, then they look at the most significant varying cost, which is jobs."
Carl said if no agreement is reached, it could affect everyone from small businesses and nonprofits to major corporations.
"While higher tax rates for higher earners may sound good to the average worker, the high earners are usually at the top of corporations and can really create and preserve jobs. We need to be concerned for both the small businesses and the large corporations," Carl said. "It's almost unpredictable as to how widespread this can be."
Carl said he was hopeful that cooler heads will prevail in Washington, D.C., to reach a compromise that requires both well-placed expense and tax reductions.
"There needs to be a compromise. I don't think there can be a complete solution by Dec. 31 but there needs to be some headway made so we can move into the 2013 year with the goal of a true budget reform," Carl said. "If we go without changing our behavior, the outcome isn't going to be too good. We need our political leaders to come forward to make some effective decisions to prevent a road ending in disaster."
Bill Wydra Jr., president of Ashland Technologies in Hegins, said manufacturing companies are also concerned about the stalled negotiations on the fiscal cliff.
"I don't think anyone likes being in limbo. It's not good for business," Wydra said Wednesday.
Ashland Technologies is a contract-manufacturing operation that produces a wide range of products from roller coaster cars to hot dog grills to windmills. The company has been included as one of the fasted-growing manufacturing businesses in that nation by Inc. 5000.
"We have been very effective at building low-cost models all under one roof," Wydra said. "We have driven a lot of costs out of the system and actually grow during recession because prices are more competitive."
Wydra said if taxes on the middle class go up, then companies come under pressure to increase wages. Higher wages and increased benefits will have companies heavily focused on automation to reduce the need for employees, Wydra said. Meanwhile, Wydra said Ashland Technologies is trying to automate for lack of employees. He said there are 20 openings with the company.
"I think it's really going to limit hiring and investing and cripple the small business community if it keeps going like it is now," Wydra said. "This is only the beginning. If we don't get government costs under control, who knows what will happen next."
Celebrating 100 years of business in 2013, Murphy Jewelers has managed to survive many economic crises, including the Great Depression.
That doesn't mean, however, that the local family business isn't worried about the impending fiscal cliff.
"For a company that has been around for that long, we have been through the good times and the bad," Patrick J. Murphy, owner of Murphy Jewelers, said Tuesday. "I think everyone is keeping an eye on how it will affect the local economy. I think for anyone to say that they have no concern, they would be kidding themselves."
While people tightened their spending during the 2008 recession, Murphy said business at the family store didn't decline much.
"We are in a unique situation here," Murphy said. "In our case, we always feel that people are going to buy jewelry to celebrate the holidays and special occasions. We could certainly be affected because we sell luxury goods, but we always take the high road and say people are always going to have to enjoy life and spend their hard-earned money on some kind of reward."
He said there are constant challenges for any business but it takes patience and 110 percent effort from employees to survive for a century.
"I don't think we would be here 100 years if we couldn't survive those obstacles that were thrown at us," Murphy said. "Anyone can buy and sell jewelry but after being involved in the community for 100 years, we kind of developed a strategic plan."
Murphy said he has his fingers crossed that a comprise is met on the fiscal cliff.
"Whatever party you are on, we have to believe in our country and do what is right. I want to see our country be the leader it really should be and that starts locally."