Timmons is optimistic that Congress and the president will find a way to compromise and avoid the automatic tax increases and spending cuts that will otherwise take affect next year.
"I do believe cooler heads will prevail in Washington, D.C. and we'll see Congress and the president come together in a way we have not seen in years," Timmons said. "That is my hope and desire."
But he didn't mince words about what will happen if the nation's leaders fail to reach a budget deal.
Six million jobs will be lost, unemployment will quickly rise to 11 percent and real income will drop by 10 percent by 2015.
The combination of automatic tax increases and spending cuts scheduled to take effect next year will be particularly painful for manufacturers, Timmons said. Two-thirds of manufacturers pay taxes based on the individual tax rate, so any tax hikes will hurt. Some manufacturers pay 50 percent of their profit in taxes.
The U.S. has the highest corporate tax rate in the world at 35 percent, Timmons noted. Other countries are lowering their corporate tax rates in an attempt to take business away from the U.S. Canada just lowered its rate to 15 percent.
NAM has long advocated for a corporate tax rate of 25 percent or lower, with an emphasis on "or lower," Timmons said.
And the across-the-board cuts in federal spending will hit the defense manufacturing sector hard.
Without a deal, Timmons said the cuts will occur in the wrong places.
Timmons also emphasized the need for major reforms in entitlement programs. Without them, he said, we will bankrupt the nation.
"This cannot be ignored," he said. "They're going to have to come together in a good old-fashioned bipartisan way and find a compromise."
Taxes and spending issues will likely dominate the political discussion for a while, but lawmakers must get around to dealing with the problem of over-regulation, Timmons said.
Manufacturers, he said, have been "pummeled" by new regulation for years, and both political parties are to blame. It's now 20 percent more expensive to manufacture here than anywhere else in the world, even after taking out the cost of health care," Timmons said.
"I'm not saying all regulations are bad, but they really need to be balanced," he said. "And right now, they are not."
Timmons struck a bipartisan tone with his comments, saying that "addressing our challenges is not about politics, it's all about policy."
Despite the challenges, it's clear that Timmons is optimistic.
"Manufacturing means jobs, manufacturing means economic growth, and our nation desperately needs both," Timmons said.
The actions taken by Congress and the president in the next month will in large part determine whether growth will occur.
"We are on the edge," Timmons said, "of a rebirth and renaissance."
