Chairman and chief executive Jay Fishman of insurer Travelers Cos. Inc. said Monday at a U.S. Chamber of Commerce event that U.S. businesses are hesitant to make investment and hiring decisions because of unprecedented budget uncertainty at the federal level.
"It's just never been more uncertain."
The U.S. government's gap between spending and income was the second largest on record last year--$1.294 trillion in fiscal 2010, the Treasury
Department said last month. The deficit amounted to 8.9% of gross domestic product. That is down from fiscal 2009, when the deficit of $1.416 trillion was 10.0% of GDP. Fiscal years end Sept. 30.
The Congressional Budget Office, meanwhile, forecasts that federal debt will reach 69.4% of GDP by 2020 from 36% before the economic crisis.
Fishman said that businesses have a hard time understanding the impact of the debt on the economy, and have little clarity on the policies that may be enacted to cut it. That makes executives take a more conservative, cautious path, he said.
Business executives "are accustomed to operating in unclear environments. This one is just different," Fishman said.
Fishman said it would likely require broad-based, collective sacrifice to reduce the debt.