Page 38 - ATR 6 2013 digital

Perry doesn’t see political uncer-
tainty with Obamacare or with the
nation’s fiscal policies being a primary
economic driver in the short term.
“boTTom liNe, There’s a loT of peNT-up He pointed out that, despite the shut-
demaNd [for New Trucks], buT margiNs haVe down and congressional squabbling,
“the economy hardly even blinked in
To improVe, aNd if They doN’T improVe fasT October.” The federal budget deficit,
eNough, you could see where some of These which is the amount of debt the gov-
smaller fleeTs go ouT of busiNess because ernment adds each individual year,
They’Ve JusT simply goTTeN Nickeled-aNd-dimed decreased from more than $1 tril-
lion in 2012 to $680 billion in 2013,
To deaTh oN Their maiNTeNaNce cosTs.” though the cumulative overall national
—bob cosTello, chief ecoNomisT & Vice presideNT, debt continues to climb well past $17
americaN TruckiNg associaTioNs trillion. That $680 billion represents
about four percent of the nation’s gross
domestic product, which Perry said is
low enough that global financial mar-
kets will continue to loan money to
ing more because they’re at all-time capital, hire more people, because they Uncle Sam. Absent a crisis, elected offi-
lows and the Federal Reserve is printing don’t know if we’re going to shoot our- cials won’t have an incentive to address
money to keep these rates low, and so selves in the foot.” the problem and will kick the problem
they’re under pressure to stop,” he said. Early next year, the federal gov- down the road until after the 2016 elec-
“And even if they don’t stop, the global ernment is expected to reach another tion, Perry predicted.
financial markets may say, ‘Wait a min- debt ceiling—the statutory limit on Perry also foresees higher fuel taxes
ute, I don’t like what you’re doing to the how much it can borrow. Congress has in trucking’s future. He said elected
currency. I’m going to lower your credit always voted to extend the debt ceil- officials are devising ways to raise rev-
rating, and that will require higher ing, but, lately, not until very close to enues, such as the new Pennsylvania
interest rates.’” the deadline. According to Costello, transportation law that increases taxes
Costello, meanwhile, said politi- it might seem like a good idea for the at the wholesale level and is indexed
cal uncertainty is an important con- federal government to stop borrowing to inflation. He believes increased fuel
tributor to the sluggish economy. all of this money. However, failing to taxes also could pay for government
Businesses have spent years wrestling extend the debt ceiling suddenly would health care programs, as in Europe.
with the changes coming through the remove hundreds of billions of dollars Meanwhile, he believes the federal gov-
Affordable Care Act, otherwise known from the American economy in govern- ernment will allow manufacturers to
as Obamacare. Meanwhile, ongoing ment spending. It also would create increase tractor-trailer sizes within the
Washington squabbles over fiscal policy damaging multiplier effects, as employ- next 10 years.
– the most recent being the government ers who had been doing business with Despite these political uncertain-
shutdown – have had an even bigger the government would lose income and ties, the underlying economics seem
effect. lay off employees. While the federal to favor carriers. Those able to weather
“I would say all of this is already budget deficit should be reduced, he said the increase in driver pay will find
making a difference,” he said. “This the economy couldn’t easily absorb that themselves in a strong negotiating posi-
going to the brink as much as we have kind of shock to the system. And with tion as the economy improves and the
over the last five years. There’s a reason the level of partisanship coming from supply-and-demand formula moves
why corporate America has a record Washington these days, he believes a in the industry’s favor. Unfortunately,
amount of cash on hand, right? And debt ceiling deadline could come and go while we don’t know when the capacity
most if it stems from Washington. Part with no deal. crunch will come, the driver shortage is
of it, no doubt, is they don’t know what “This is what makes my job and already here.
Obamacare is going to cost them. But other economic forecasters’ job so dif- Still, too few trucks will be haul-
the other part is all of this uncertainty ficult,” he said. “If they don’t extend the ing too much freight. That will be good
outside of Obamacare and are we going debt ceiling, well, you’re going to hear for carriers. So it will get worse before
to extend the debt ceiling. Businesses me go 180 degrees in the opposite direc- it gets better. “But then,” Costello said,
don’t want to take risks. They don’t tion and talk about the recession that’s “once it gets better, it’s going to get a lot
want to go out there and invest in new coming.” better.”

38 arkaNsas TruckiNg reporT | issue 6 2013