Nov 12, 2012I have studiously avoided writing about politics in this column, especially since my own third-party bid for the U.S. presidency failed to attract many voters (see Why I'm Running for President). But politics could affect companies' ability to invest in new technologies, including radio frequency identification, and to expand their business. And for that reason, I think it's time to talk politics.
Last year, business seemed good during the first half of the year—and then the U.S. federal government essentially ran out of money. The Congress either had to raise the legal limit on what it could borrow (the "debt ceiling"), or the government would not be able to pay its bills. Republicans refused to allow this, unless President Obama and his party agreed to spending cuts. Negotiations went down to the wire, causing a great deal of uncertainty among consumers, who were already spending very little, and businesses, which had been starting to become more confident.
The economy slowed palpably. I spoke to some firms that saw spending for RFID and other projects put on hold. I don't want to see that happen again, but I fear that the Democrats and Republicans, like Thelma and Louise from Ridley Scott's 1991 hit film, are on a joyride toward the abyss. In this case, it's known as the "fiscal cliff."
The fiscal cliff is the term that the media uses for some separate issues that will all come to a head at the end of this year. At midnight on Dec. 31, 2012, the Bush-era tax cuts, as well as some tax breaks for businesses and a temporary payroll tax cut, will all expire. The elimination of the temporary payroll tax cut will result in taxes increasing by 2 percent. At the same time, steep spending cuts to the defense budget, Medicare and other government programs—which was put into the deal on the debt-ceiling issue as a kind of cudgel, to force the two parties to negotiate a long-term deal—will kick in.
A report issued by the nonpartisan Congressional Budget Office said that if Democrats and Republicans fail to come to an agreement regarding tax and spending cuts, then as all of the aspects associated with the "fiscal cliff" occur, the U.S. economy will lurch back into recession next year, and unemployment will likely rise to 9.1 percent by the end of 2013.
If our dysfunctional leaders in Washington do this to us, or even if they just push negotiations to the 11th hour, leading to a lot of short-term uncertainty, it could greatly hurt the economy, as well as cause companies to cut back spending on new RFID and other technology projects and expansion plans. That's bad for everyone.
I believe businesspeople must take an active stand and encourage the two parties to embrace the proposal put forward by the National Commission on Fiscal Responsibility and Reform (better known as the Simpson-Bowles Commission). We need to simplify the tax code, raise some revenue and cut spending. I think it's pretty obvious to most businesspeople—indeed, to most Americans. If the folks in Washington are too dense to figure it out, businesspeople should lead the way.
Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.