WASHINGTON (Reuters) – Consensus may be hard to find in Washington these days, but many corporate executives and economists seem to agree on one point: the biggest risk to the world’s largest economy may be its own elected representatives.
Down-to-the-wire budget and debt crises, indiscriminate spending cuts and a 16-day government shutdown may not be enough to push the U.S. economy back into recession.
But Washington’s policy blunders in recent years have significantly slowed economic growth and kept roughly 2 million people out of work, according to recent estimates.
Steep spending cuts are a big reason. But the governance-by-crisis also may be prompting businesses to sit on their cash rather than building new factories, buying more equipment and hiring more workers, some economists say.
“Increasingly I’m of the view that the reason why our economy can’t kick into a higher gear is because of the uncertainty created by Washington,” said Mark Zandi, chief economist of Moody’s Analytics.
Congress on Wednesday voted to re-open the government and extend its borrowing authority through February of next year. But the deal did nothing to resolve the underlying disputes that led to the crisis in the first place – leading many to fear that the standoff may play out again in a few months. The plan sets up a forum to try to forge a more permanent budget deal, but few expect it to succeed.