US Economy Hamstrung By Washington's Brinksmanship


COLORADO SPRINGS, Colo. (AP) â¿¿ Three budget crises ago, in early 2011, Republicans and President Barack Obama faced off over raising the debt ceiling â¿¿ and Alison Brown saw the writing on the wall.

Washington had entered the cycle of partisan brinksmanship over the budget that has sown confusion among federal agencies and delayed contracts to small companies like Brown's Navsys Corp., which designs satellite navigation systems in this military town. So Brown slashed her 40-strong workforce in half. And as she feared back then, her revenues have since plunged by half.

The latest crisis hit on Friday with across-the-board automatic spending cuts. They total about $85 billion, but the economic damage created by two years of showdowns is far greater. And there's no end in sight: Temporary resolutions funding the government expire on March 27. May brings another debt ceiling standoff.

"We're planning for the worst," Brown said in her office with a view of the Rampart Range, a portrait of President George W. Bush on the shelf behind her. "We're not going to be taking risks and making investments, and that's bad for the country as a whole."

Thousands of businesses are in similar straits, from defense contractors like Navsys to wind turbine manufacturers to wheat farmers. It is one reason the U.S. economic recovery has been so persistently anemic. But it is happening quietly, drowned out by dueling press conferences inside the Beltway and general disgust at the perpetual drama over federal spending.

In a paper this year, three economists estimated that 2.3 million private sector jobs have been lost since 2008 because of uncertainty over government policy. That uncertainty has spiked dramatically since the start of the budget showdowns in 2011.

While debates always have generated some uncertainty, "now every single decision is subject to this excruciating process," said Scott R. Baker, one of the paper's authors and an economics professor at Stanford University.

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