The Wall Street Journal reports, “U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery. Half of the nation’s 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls. Nationwide, business investment in equipment and software—a measure of economic vitality in the corporate sector—stalled in the third quarter for the first time since early 2009. Corporate investment in new buildings has declined.”

According to the WSJ, “Corporate executives say they are slowing or delaying big projects to protect profits amid easing demand and rising uncertainty. Uncertainty around the U.S. elections and federal budget policies also appear among the factors driving the investment pullback since midyear. It is unclear whether Washington will avert the so-called fiscal cliff, tax increases and spending cuts scheduled to begin Jan. 2. Companies fear that failure to resolve the fiscal cliff will tip the economy back into recession by sapping consumer spending, damaging investor confidence and eating into corporate profits.”

Meanwhile, the AP writes, “Just last year, Obama and top Democrats were willing during budget negotiations with Republicans to take politically risky steps such as reducing the annual inflation adjustment to Social Security and raising the eligibility age for Medicare. Now, with new leverage from Obama’s big election victory and a playing field for negotiations that is more favorable in other ways, too, Senate Majority Leader Harry Reid and other Democrats are taking a harder line. ‘I’ve made it very clear. I’ve told anyone that will listen, including everyone in the White House, including the president, that I am not going to be part of having Social Security as part of these talks relating to this deficit,’ Reid, D-Nev., told reporters. Reid’s edict would appear to take a key proposal off the table as an ingredient for a deal on avoiding the ‘fiscal cliff,’ the year-end combination of expiring President George W. Bush-era tax cuts and harsh across-the-board spending cuts.”

And so with Democrats now making a solution to the fiscal cliff in the short-term and getting America’s fiscal picture under control in the long term, it’s no wonder businesses continue to be skittish about investment. As Paul Ashworth, chief U.S. economist at Capital Economics, told The Wall Street Journal, “Given the timing of the drop-off in business investment . . . you have to think it’s not just a coincidence with the timing of the fiscal cliff.”

But if Democrats won’t touch entitlements, a solution that creates some certainty and begins to address the country’s long-term fiscal issues doesn’t look any closer. The AP notes Senate Republican Leader Mitch McConnell said, “Washington’s problem isn’t that it taxes too little, but that it spends too much. But in a good-faith effort to make progress on boosting the economy and government’s long-term solvency, Republicans like me have said for more than a year now that we’re open to new revenue in exchange for meaningful reforms to the entitlement programs that are the primary drivers of our debt.”

As Sen. Kelly Ayotte (R-NH) said in the Weekly Republican Address, “One thing is clear: doing nothing is not an option. And any effort to address our fiscal crisis without including entitlement reform can’t be taken seriously.”

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