Georgia CEOs worry about debt-ceiling impasse

From Chick-fil-A to UPS, top executives of Georgia firms are worried about the impasse over the federal debt ceiling. Some already are noticing a financial fallout, including higher interest rates and fewer job prospects.

To a person, they echoed what Edward Callaway, chairman and CEO of Callaway Gardens, said: “Uncertainty is the enemy of business investment.”

That enemy has already done damage.

Lenders are raising interest rates on some newly proposed deals in the struggling commercial real estate industry, said Bob Peterson, chairman and CEO of Atlanta-based Carter. That, in turn, has caused some property purchases to be postponed, which is not what the weak commercial market needs right now.

Because of the uncertainty, Peterson said, some commercial lenders are sitting on the sidelines. Others are starting to raise rates to cover the increased risk of the unknown.

“I’ve been seeing it over the last 48 hours,” as the gridlock intensified, Peterson said.

Dan Cathy, president and chief operating officer of Chick-fil-A, worries that those higher rates will move on to consumers.

“If we lose our [AAA] credit rating,” Cathy said, referring to the nation’s rating, “it will have a big impact on interest rates. Consumers are already getting squeezed, and it will have a trickle-down effect to us, as well.”

Cathy also said he was concerned about the “paralyzing, uncollaborative tone in Washington … that prohibits productive, working relations.”

Even if the debt ceiling is increased now — following all the political fighting — U.S. Treasuries may still be downgraded, said Bob Webb, chairman of the Troutman Sanders law firm.

“There are a whole host of [financial] issues that we’re concerned about that will require lots of analysis to be done,” Webb said.

In other words, uncertainty is breeding more uncertainty, including whether the U.S. will stand behind the financial promises it makes to investors.

“We are hurting our standing in the world and general confidence in us,” said Marty Flanagan, president and CEO of the Invesco money management firm. A default would be counterproductive, he pointed out, because the higher rates the government would have to pay would further balloon the deficit.

This is such an important issue that the McKenna Long & Aldridge law firm has been giving daily updates to some of its clients for more than a month now, said Jeff Haidet, the firm’s chairman.

On a short-term basis, these top execs said they thought a deal would be reached before or shortly after Tuesday’s deadline.

But Callaway and others think a longer-term problem looms in the form of a very weak economy.

“We are husbanding cash,” Callaway said of his company’s financial posture right now. “We are not hiring [permanent workers] in the face of a possible downturn. … We are preparing for a rough ride.”

But while UPS chief Scott Davis is worried about the economic uncertainty, he struck a relatively positive note if the debt ceiling gets raised.

“If Congress and the president resolve this debt-ceiling issue satisfactorily in the next week, the mood of the country could change pretty quickly,” Davis said. “We could see demand picking up.”

Still, he cautioned, “there’s a huge variability on where the economy can go. We need to come up with a big, serious, long-term solution on the debt.”

– Henry Unger, The Biz Beat

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41 comments Add your comment

Buzz G

July 28th, 2011
7:39 am

Henry, you and the rest of the liberal media have this wrong. People are not worried about the debt ceiling impasse. That is a ruse. People are worried about the crazy spending going on in Washington. People, even those without any economic education, know that it is unsustainable and will eventually bring this nation to its knees. People want the crazy spending to stop.

And the Democrats are using every trick they can to keep the spending going.

Please get this right. It is important.

Dave

July 28th, 2011
8:02 am

Harry, your definitely have forgotten how we got to this self inflicted mess. Your fellow Republicans had a part in this tango handing Obama a big mess in 2008. Your party supported the Iraq War and hid it from the budget. You raised the debt ceiling when it was convienent. You cut taxes for the wealthy saying it would support job growth (maybe in other countries it supported job growth). Lets face it our country has no growth future as long as we continue to fight each other.

Clinton "Skink" Tyree

July 28th, 2011
8:49 am

It would be beneficial in any deliberative endeavor to have folks who want to discuss the issues and reach a negoiated solution. Unfortunately, that is not the case with the debt ceiling.

The debate is sidetracked by zealots who have received their marching orders and are determined to carry them out regardless of the outcome. This is the same mentality that disrupted the healthcare debate — anarchists who had received instructions from Dick Armey and his fellow oligarchs on how to disrupt and shout down the debate.

Mr. Boehner finds himself in an intolerable position. Even his own party cannot reach a consensus and he is caught in the middle. Unfortunately, Mr. Boehner may be presiding over the demise of the Republican Party — and I’ll bet a dollar against a donut that the Tea Party will evaporate like the dew in the mid-day sun. Zealots have a way of flaming out!

Reaching out to Callway Gardens?

July 28th, 2011
9:18 am

Henry,
Of all the major corporations we have in this state, you decided to reach out to Ed Callaway?? Why not a company like Equifax, who has data on credit/debt to get some real business feedback.

Dave from GT

July 28th, 2011
10:25 am

Any way you cut it, govenment spending must be reduced.

Let me say that again……

Any way you cut it, government spending must be reduced.

Either that, or have a war with our Chinese creditors, wipe them out, and cancel our debt! Oh…. I forgot, the Chi coms are not our only creditors.

Well….. like I said before……. Any way you cut it, governmnet spending must be reduced!!!!!

not lazy

July 28th, 2011
10:45 am

Dave from GT,
Agreed, yes we must drastically reduce government spending. However the Chinese only hold about 7.5% of our national debt though they are our largest foreign creditor. The national debt is mostly one big ponzi scheme in that we owe ourselves in the form of treasuries purchased through social security, the federal reserve, etc. Look up Congressional Quarterly’s interactive debt chart. Best explantion I’ve seen as to why we must not arbitrarily make ourselves default. See nose spite face references.

Robert Barron

July 28th, 2011
10:46 am

@BuzzG.
I might agree with you if you would point out W’s 5.365 trillion in deficit spending before Obama set foot in the WH.
Would we have gotten the Second Great Depression if Obama had immediately balanced the budget and cut government jobs drastically?
Why didn’t any Republicans start raising cain about deficits in 2004. 2005 or 20006?
The tax cut needed to be ended but selfishly Republicans did not want to give it up.
We should have been running surpluses during the boom but no one in either party ever says that.

Dr. Gary W. Griffin

July 28th, 2011
10:53 am

Today’s political parties are reminiscent of two boys playing with matches who accidentally start a forest fire. Thousands of acres of trees and many homes are burned. The end result is thousands of dollars of damage. Of course, the two boys are scarred and pretend they had nothing to do with the fire. Upon investigation, it’s found that they started the fire. Once identified, they deny any involvement. After conclusive evidence shows they started the fire, and they can’t deny their involvement, they point their fingers at each other and say, “He made me do it.” Sadly, this is how our political parties seem to operate in America. Inert America: Crossroads to the Future

Robert Barron

July 28th, 2011
10:54 am

@Dave.
Approximate deficit spending during Reagan’s, Bush 41’s and Clinton’s 4 year presidential terms was one trillion per term.
During W’s 2 terms:
1st term – 2.234 trillion deficit.
2nd term – 3.131 trillion deficit
W nearly doubled the national debt of all prior presidents during his eight years.
Republicans say now is a terrible time to raise taxes.
During the excellent time to raise taxes (or end the tax cut) as the economy moved into boom phase (2004-2006), where were all these tax timing experts?
They were too afraid to challenge their party’s orthodoxy.

RGB

July 28th, 2011
11:06 am

Gosh, who would have thought that a “zealot” is someone who wants to live within his means.

Almost all 50 states live within their means.

Almost all Americans live within their means (except the one who haven’t–and they shouldn’t be our role models).

The “draconian” Republican proposal increases, yes increases spending by $7 trillion over 10 years.

Based on an earlier poster’s observation, in our personal lives and at the state level, We Are a Nation of Zealots.

Order 227

July 28th, 2011
11:16 am

Robert Barron,

Last time I checked W wasn’t president. Matter of fact he hasn’t been in 2 1/2 years. And sure he was a terrible president running up 5 trillion in debt in 8 years. And now we have Obama who has run up 4 trillion in 2 1/2 years with no end in sight. Which is worse?

Robert Barron

July 28th, 2011
11:28 am

@Order 227
Maybe we should call it a tie.
I voted for W twice btw.
But feel I got fooled.
He promised in his first term to be “another Reagan”.
But W was another spoiled brat president like JFK.
Both of those two had their path through life made easy by their rich daddies.
Having failed to develop Reagan’s principles, W copied the tax cuts without bothering to notice he was doubling our spending. Permanent is a bad idea once a boom starts.
Then he promised for his second term to be “another Truman”.
Truman raised taxes to pay for the Korean War.
As a result, the “hand” he left Ike was a good one.
W left Obama a lousy hand.
I did not vote for Obama and not sure I can in the next election.
Obama gets called a liar a number of times.
Didn’t W lie also with his two promises I just mentioned?
He does not really grasp either man and just used them as a political tools to fool us.

RGB

July 28th, 2011
11:32 am

@ Robert Barron:

Setting aside what you call “party orthodoxy”, would eliminating the “Evil Bush Tax Cuts” (which Obama extended) solve our debt problems or even make much of a difference? Simple math says “no”.

Those of you who believe tax increases are our Savior should know that the “cost” of the Bush tax cuts for 2 years was $544.3 billion or $272 billion/year.

As CNN states: “The bulk of that cost — $463 billion — is for the extension of cuts for families making less than $250,000, including two years of relief for 2010 and 2011 for the middle class from the Alternative Minimum Tax. The rest — $81.5 billion — is attributable to the extension of cuts that apply to the highest income families” (or what liberals term the “evil rich”).

So if you got your wish and the evil tax cuts were erased (including those for the evil non-rich)–AND employment was unaffected by the tax increases (which is impossible), then it would take nearly 6 years to pay for ONE year of President Obama’s deficits.

So, recognizing that getting rid of evil tax cuts is not the solution, what’s your next move?

Thoughtful people recognize that the Left’s orthodoxy of always raising tax rates is not based on math, revenue production, budgeting principles, economics, or logic. Rather, it is based on an undying desire to redistribute wealth by punishing our most productive citizens. President Obama acknowledged this himself in an interview with Charlie Gibson.

Liberals view wealth as a fixed pie so in order for person “A” to benefit government must take it from person “B”. Our country’s history of societal mobility, productivity, and wealth creation proves this thinking to be erroneous.

Strangely, those who reject trickle-down economics are embracing trickle-up poverty full-force.

Robert Barron

July 28th, 2011
11:35 am

I would like a compromise of some kind.
Both sides bending.
I thought at first I would like the Tea Party but they have no bend to them.
I fear they will wreck us with their obstinacy.
The insulting going on by both sides I do not think helps at all.
I object to calling a president a liar as the SC congressman did and Beck does all the time.
W lied about the kind of president he would give us twice.
What politician does not play politics?

mdee

July 28th, 2011
11:39 am

only one thing is positively certain.

all this uncertaintly is product of our uncertainty in God.

we’ve created these issues that are beyond our capacity to fix… the government, school systems, lockouts, the economy, unusual weather patterns. there is no real leadership in this so called government of ours. so we’ve lost our triple a rating with God we once had. what do we expect?
(most) churches and their leaders are so spiritually broke, they can’t pay attention to the root of the problem.

read the handwriting on the wall, we better look higher than this debt ceiling before it crashes down upon us and crushes all of us very soon.

Robert Barron

July 28th, 2011
11:40 am

I do not consider tax cuts evil.
I consider them a good thing to get the economy going during a slump.
But during a boom, we need to be running a surplus and not a balanced budget.
All arguing with me today, welcome.
But tell me when either party has called for a surplus during a boom as needed to slow it down and prevent it from becoming a bubble.
Neither side allows a surplus.
A surplus they both consider money they should spend to buy votes and reward cronies.
They both decry special interests yet have their own special interests they reward after they win.

Robert Barron

July 28th, 2011
11:42 am

@mdee.
Interesting take on things.
I’ve always noticed how the folks with money at church don’t get called for their misdeeds often, if at all.

Robert Barron

July 28th, 2011
11:49 am

One other thing.
The Ben Ber Nacke (seen the cartoon video) was another card in the lousy hand W left Obama.
Trying to be a moderate, Obama renominated him.
I’m an independent.
I tired of both parties.
The presidents we get from both parties are not experienced enough.
Maybe Reagan was a good president (for some anyway) because he was aged enough to have some principles he would stand for.
Most pols stand for what gets them elected and would switch to something else (prescription drug program) if it gets them reelected.

RGB

July 28th, 2011
11:51 am

It is most strange that you criticize our current political parties for not producing surpluses (which are achieved by spending restraint, not tax increases), but then criticize the Tea Party because “they have no bend to them”.

I think of it this way. Democrats want to drive the car off the cliff at 120 mph. Establishment Republicans, being the magnanimous individuals they purport to be, say “if you elect me I’ll stop this madness. My plan is to reduce the speed with which we go off the cliff to 80 mph.”

What about a plan not to go over the cliff at all? That’s what Tea Party is all about and yet you criticize them for it.

Robert Barron

July 28th, 2011
11:56 am

RGB
Reagan, Bush 41 and Clinton averaged one trillion dollar deficits per each term.
W doubled that rate.
The excellent time to raise taxes by ending the tax cut was 2004 or 2005.
Were all Republicans too busy drinking the deficits don’t matter kooliad for eight years?

Robert Barron

July 28th, 2011
11:59 am

Maybe we can agree except I’d put both in the off the cliff at 120 mph category.
I am worried the Tea Party would rather watch the car wreck than make an imperfect deal that might stop the car before the deal.

Robert Barron

July 28th, 2011
11:59 am

Meant “before the cliff”.

Robert Barron

July 28th, 2011
12:01 pm

I am curious if the elderly on Social Security will accept any cuts in their checks or benefits.
AARP can be fearsome in defeating pols they don’t like.

Mikey

July 28th, 2011
12:01 pm

Anyone seen or heard from our fearless or spineless Senator Saxby Chambless or is he hidding down in the blueberry field.

Robert Barron

July 28th, 2011
12:05 pm

@Mikey.
It is futile I know to try and stop people but both sides in our debates hamper the process with insults.
So I don’t like calling the president a liar.
You can easily find “lies” by all politicians.
So I don’t like spineless either.
Tell us what your complaint with Chambliss is instead.

Mikey

July 28th, 2011
12:05 pm

Robert to answer your question. Hell no. As a WWII veteran my benefits do not even cover one percent of the sacrifice given. My recommendation stop sending Bozo and the three stooges to Washington.

Mikey

July 28th, 2011
12:07 pm

He is a reactive politician who sits in comfort and avoids being pressured into tough decisions.

Robert Barron

July 28th, 2011
12:12 pm

That’s much better. ha ha

Mikey

July 28th, 2011
12:12 pm

I have listened to Fox News interview leaders from both sides of the isle who have very constructive and positive ideas. Maybe we have the wrong leaders playing in the sand box of compromise.

Robert Barron

July 28th, 2011
12:15 pm

I don’t want my mom’s check (dad was deceased WW2 pilot in pacific theater) cut either.
Just asking to bring u to the debate.

Robert Barron

July 28th, 2011
12:16 pm

I can agree with that.
We don’t seem to be getting anywhere.

Robert Barron

July 28th, 2011
12:22 pm

Hey Mikey.
Not to put all the blame at his feet but don’t we need a term limit on the Fed Chairman?
Here is what distresses me.
The whole country does not seem to get that when the economy gets going, we need higher interest rates and/or higher taxes to slow it down.
Greenspan watched two bubbles develop and failed to act either time sufficiently to stop them.

Terry

July 28th, 2011
12:46 pm

For the 1000th time,
We have a spending problem not a revenue problem.

If anyone cannot either understand that or refuses to believe that then there is no need to even have a conversation. Nothing else matters.

Barsheniqua

July 28th, 2011
12:52 pm

“Dan Cathy, president and chief operating officer of Chick-fil-A, worries that those higher rates will move on to consumers.”

Dan, worry less about interest rates and more about the slow counter service in Chick-fil-A restaurants. The lines used to move fast when your dad ran the company. Now it takes so long to get to the register I almost feel like I need to bring my lawn chair.

Robert Barron

July 28th, 2011
1:05 pm

@Terry.
How about we have a deficit spending problem?
And you can meet that problem two ways.
Cutting spending and/or raising revenues.
Nixon was not a very popular politician but had he run deficits at W’s two trillion a term rate, who knows?
With all that vote buying, he might now be considered great.
His rate of deficit spending was approximately 117 billion per 4 year term.
No wonder he was not liked.
Or was he responsible like Truman?
If you had a choice, would you rather be prez after Truman or after W?
No brainer I think.

Robert Barron

July 28th, 2011
1:09 pm

I’m waiting for an answer today why no one spoke up during W’s huge deficits.
An excellent time to raise taxes was right after the start of W’s 2nd term.
If you don’t want a train-wreck.
If Greenspan was going to fail to raise interest rates in time for the 2nd time, higher taxes were needed.

Robert Barron

July 28th, 2011
1:20 pm

Ken Langone (Home Depot founder) wants to pay more taxes.
He thinks he should not get any Social Security at all.
But if he agrees to more taxes, he wants it used to pay down debt.
So he wants higher taxes and reduced spending (probably by a lot).
That is the middle ground the two sides cannot seem to reach.
I have been a Republican for twenty years but the no taxes mantra is a menace to sound government.

Peter

July 28th, 2011
1:33 pm

Poor CEOs… they are making more than ever, and they are worried ?

HA HA HA…… But hey Republican’s think deficits don’t matter, and why not cut taxes more ?

Reader

July 28th, 2011
1:38 pm

Instead, Chick-fil-A should worry about the number of billboards they have junking up Georgia. I don’t know who owns those horrible tree killers, but Chick-fil-A must be their number one customer. They are ugly and take the place of Georgia’s once beautiful forest.

The Real Fletch

July 28th, 2011
2:16 pm

Yup – after reading some of these posts, it is pretty apparent why this country is going down in white hot flames. Fine, pass the tax cuts, that will take care of 8% of Obama’s budget increase over ‘10. The only thing it will actually do is serve as a symbolic victory for his next election bid. “We really stuck it to those fat cats! Yeah!” – but you are absolutely no better off than you were the day before those taxes were raised – on those “millionaires + billionaires” making *gasp* over 100k/year. People, this is the classic case of having your cake and eating it too; we don’t want to be in debt but we don’t want to part with social programs: Medicare, Medicade, SS and Education make up 60% of our entire expenditures annually – none of these are run competently or effectively. If our economy cannot fund these programs, which is fundamentally what is happening, then it really doesn’t matter what you want to hold onto. We all knew the day for extremely hard decisions was coming. The bottom line is that we will continue to be downgraded at regular intervals until we reduce debt significantly.

Terry

July 28th, 2011
3:06 pm

Raising taxes barely brings in more revenue. The Clinton tax hike in 1993 added only an additional 1% of the increased revenues that were brought in through 2000. Luckily for him, a new Congress was voted in 1994 & slashed the budget & expenses & brought the President kicking & screaming to the altar to pass welfare reform. After that time the economy started to take off, then took off even more during the unsustainable tech boom which most knew wouldn’t last.