This year, I introduced a weekly series called "CEO Gaffe of the Week." Having come across more than a handful of questionable executive decisions last year when compiling my list of the worst CEOs of 2011, I thought it could be a learning experience for all of us if I pointed out apparent gaffes as they occur. Trusting your investments begins with trusting the leadership at the top -- and with leaders like these on your side, sometimes you don't need enemies!
This week, I'm again going to divert from my usual tactics and throw your representative or state CEO on the hot seat and lump the entirety of Congress in my naughty column!
The dunce cap
Washington politics is normally nothing more than a sideshow for the average investor, but this time, the fiscal cliff talks, followed by another U.S. debt ceiling debate almost certain to take center stage in the coming weeks, have devolved into nothing more than a high-priced finger-pointing session.
The average U.S. Congress representative makes $174,000 a year compared to just $39,416 for the average American worker. Let me tell you, for $174,000 there are a good number of American citizens that would have no problem reaching across the aisle to find some sort of middle ground to keep as many Americans working as possible while also bringing in extra taxes and reducing the budget deficit. Furthermore, the 112th Congress has proven the least productive legislative body in more than a generation, with a mere 173 laws passed through September 2012 based on figures in The New York Times.
According to the Congressional Budget Office, U.S. employment, which has dipped to its lowest levels in four years, would spike back to 9.1% if no fiscal cliff deal gets done and payroll tax hikes are implemented across the board. In addition, the CBO estimates that economic production would dip by 0.5%. Congress has effectively had two years to prepare for this eventual stalemate, yet nothing even close to a deal has been struck despite two proposals from both political parties.
To the corner Congress
Not only is the majority of the American public counting on Congress to hash out a deal that both drives more revenue, but also protects a slowly recovering middle-class, but American business have lashed out at the perpetual inactions of the 112th Congress.
As my Foolish colleague Demitrios Kalogeropoulos noted earlier this week, American businesses are ticked off and they aren't going to stand idly by anymore. Starbucks (NASDAQ:SBUX) has been having its baristas write "come together" on its Washington D.C. area cups for the past week while Wal-Mart's (NYSE:WMT) spokespeople have been even more vocal about the need for compromise.
Even worse, American business and individuals have delayed orders in lieu of a no-deal. Pandora Media (NYSE:P) cautioned of a weak upcoming quarter earlier this month as advertisers have pared back their spending . As Demetrios also noted, both cruise ship operator Carnival (NYSE:CCL), and logistics behemoth FedEx (NYSE:FDX) have factored a fiscal cliff deal into their growth forecast. A no-deal could require a downside revision in EPS estimates.
To me, this isn't rocket science -- get a deal done! Congress has had two years to get this deal done, and it's sat on its laurels for much of that time. As elected representatives of the people, it's time that the men and women of Congress stand up for what's in the best interests of their constituents instead of what's in the best interests of their political careers. Until a deal gets done, I wag my finger in disdain at all members of Congress!
Do you have an actual CEO you'd like to nominate for this dubious honor? Shoot me an email and a one- or two-sentence description of why your choice deserves next week's nomination, and you just may see your suggestion in the spotlight.