Greensburg Daily News, Greensburg, IN

January 10, 2013

Coplon calls fiscal cliff deal a patchwork of uncertainty

Rob Cox
Greensburg Daily News

Greensburg — Greensburg-Decatur County Economic Development Cooperation (EDC) Executive Director Marc Coplon was glad to see the US Congress recently avert the country’s so-called “fiscal cliff” with last-minute legislation.

He’s by no means convinced, however, the so-called “fiscal cliff solution” will completely avert the economic repercussions of Washington’s continued financial mismanagement.

In fact, in a recent follow-up interview to a late-2012 session with the Daily News, the executive director characterized Washington’s recent bi-partisan deal as a “fiscal cliff patch.”

Late last year, Coplon said the impending fiscal cliff had helped bring local economic expansion to an almost-complete standstill. Since Washington’s late-December/early-January compromise, though, Coplon doesn’t see much difference in Decatur County’s economic climate.

The so-called fiscal cliff was a series of tax hikes and spending cuts enacted by previous budgetary legislation designed to motivate the US branches of government to work together in crafting a sensible balanced budget.

Had the fiscal cliff not been averted, the take-home pay of virtually every American would have been significantly decreased, while vital services such as Medicare and Medicaid, unemployment and social security — to name a few — would have been severely curtailed. The US military, along with several other government entities, wouldn’t have been spared, either, and neither would the American milk buyer. The fiscal cliff would’ve also nearly doubled the price of milk, causing a serious ripple effect on consumer prices.

The executive director, however, didn’t solely contribute the county’s recent economic slowdown to fiscal cliff uncertainty. He added that the “normal year-end business operations crunch,” almost always produces “a slowdown of expansion and new business activity during November and December.”

“Combine those factors with fiscal cliff worries,” he said, “and we’re now experiencing a ‘wait-and-see’ posture by companies who were actively considering our community for their expansion and new location projects.”

He continued, “Around the time of the election, we started hearing rumblings that some of the companies currently interested in locating in Greensburg will be postponing or curtailing their plans. These companies don’t come out and say it, but it just looks so obvious. I’m hearing that state economic development officials are seeing the same things.”

For example, Coplon mentioned a major food processing company who’d expressed serious interest in moving to Greensburg, but who’s since postponed expansion.

“Due to confidentiality agreements, I can’t tell you the name of this company,” Coplon said, “but I can say that it’s a brand name just about everyone would recognize. This company’s addition would be a huge addition to the Greensburg economy.”

Coplon also cited a “very large aluminum manufacturing company” who’s been considering a site near Honda.

“They’ve fallen behind in the expected time table,” the executive director said. “This is an $80 million facility who’s narrowed their Indiana choices to Scott and Decatur County; they may be considering a couple of other mid-west states as well. This facility would bring 77 high-paying jobs.”

Coplon also mentioned the recent decision by Menards to postpone its decision on expanding into Decatur County.

“Companies just don’t want to make these kinds of big decisions when the fiscal cliff and its impact on payrolls, corporation taxes and general expenses is so uncertain,” he said. “I can’t, with 100 percent certainty, say these companies are basing their decisions based on fiscal cliff uncertainty, but all indicators and evidence point in that direction.”

Coplon added that, depending on how the fiscal cliff situation plays out in the next few months, companies will begin reevaluating their projects and reconsidering whether they still want to be as large as previously envisioned.

Contrary to prevailing sentiment among many economists, however, Coplon doesn’t think the fiscal cliff will wipe out the country’s (or the county’s) ongoing, albeit slow economic recovery.

“The fiscal cliff situation isn’t over, though,” he added. “There’s going to be another huge showdown in Washington over the debt ceiling in March, which is an extension of the fiscal cliff. If our leaders can’t agree on that issue, the US will be in great danger of yet another downgrade in our credit rating, which will force government to pay higher interest rates on outstanding loans. That would be very bad. That’s yet another reason these companies are still in a holding pattern.”

Coplon also mentioned the recent expiration of the “payroll tax holiday,” which was enacted in 2010 and temporarily reduced the tax rate workers pay toward Social Security from 6.2 percent to 4.2 percent.

“I’m not sure that many people understand that the fiscal cliff deal didn’t address the expiration of the payroll tax holiday,” he said. “People are now seeing 2 percent less money in their take home pay, and that’s another consideration that’s making these companies hesitant.”

Coplon nonetheless remains optimistic.

“Indiana is very well positioned right now to continue its forward momentum,” he said. “The problem will be states around us and the rest of the country who isn’t so fortunate as we are in regards to budgeting. The manufacturers of this state, especially here in Decatur County, I think they all feel their communities are doing pretty well.”

“I predict,” he continued, “if there’s a fiscal cliff setback for the country, the state of Indiana would be one of the last states to feel its impact. Based on what I read and on what my contacts around the country tell me about other states, in a worst-case scenario, Indiana is well-positioned to weather a recession.”

Contact: Rob Cox at 812-663-3111 x7011.