Thorn said businesses are not hiring or investing now because of economic uncertainty caused by lack of congressional action on tax legislation and the impending “fiscal cliff.”
Federal Reserve Chairman Ben Bernanke recently coined the “fiscal cliff” term to describe several major fiscal events that could happen at the close of this year and the start of 2013. The events include the expiration of the Bush-era tax cuts, the payroll tax cut and other tax relief and the first installment of $1.2 trillion across-the-board spending cuts on domestic and defense programs.
Thorn was following up on comments he made as a guest on Tuesday night’s “Fox on the Record” TV show on Fox News, with host Greta Van Susteren. Thorn was invited to the show after an earlier appearance on Fox Business News, speaking as a board member of the National Electrical Manufacturers Association.
“This pending fiscal cliff is a grave concern for our customers and for us because so much hangs in the balance,” Thorn said. “It we go over that cliff, if nothing is done, and taxes go up, we’ll be in a recession next year.”
Thorn said on the Fox show that if the situation is resolved in time, the non-partisan Congressional Budget Office predicts our economy could grow as much as 4.4 percent and 2.2 million jobs could be created.
“The difference between that and a recession is such a big variance, that it’s paralyzing a lot of business activity,” he said. “People are reluctant to invest and banks are reluctant to lend when things could go either way.”
Thorn said the feedback he’s getting from construction contractors is that a lot of projects are getting deferred because of the uncertainty where the economy is headed. He said business needs some kind of certain environment to work in and that uncertainty itself is bad.
He noted that new construction has fallen between 60-80 percent since the “great recession” began.
“The entire (construction) industry has been kind of on its knees for many years,” he told Van Susteren. “And just now, we’ve kind of bottomed out and we’re starting to slowly crawl back. And the thought of taxes going up, at the same time as government spending going down in such a precipitous way, is frightening to our markets.”
When asked Wednesday if he thinks Congress will take some action on the tax bill before the end of the year, Thorn declined to offer a prediction.
“I think that’s the problem,” he said. “Washington has become so unpredictable that we’re left, just like our customers, feeling very uncertain of how we’re going to be impacted. Like everybody else, we’re in a ‘wait and see’ mode.”
Thorn began his career in 1979 with S. C. Johnson and Son Inc. He later served with Campbell Soup Co. and Beaulieu of America, a carpet manufacturing facility in Dalton, Ga., before joining Southwire Company.
He received his B.S. degree in economics from University of Pennsylvania in 1978 and an M.B.A. degree from the Wharton School of Business Management at the University of Pennsylvania, Finance and Decision Science, in 1979.
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