Why Temporary Budget Deal In D.C. Won't Be Cheered By Madison Ave.

Trade Groups, Retailers and Agencies Just Want a Real Resolution

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Even as President Barack Obama and congressional Republicans sat down to negotiate a deal to temporarily avoid a government default and perhaps open the government, adland could find little consolation.

Dan Jaffe, the top lobbyist in Washington for the Association of National Advertisers, said continued uncertainty is the worst thing facing the industry. "Even bad news, if it is certain, is something people can deal with," he said.

"Uncertainty" was the star of a National Retail Federation ad that ran in print editions of Politico and The Hill last week. The full-page ad featured a long list of headlines noting that uncertainty was casting a shadow over the crucial holiday season. Taking direct aim at Congress, it stated: "You forget the real effect it has on people."

On Friday, Starbucks CEO Howard Schultz launched an online petition encouraging business leaders, Starbucks workers and customers to lobby Congress to "reopen our government ... pay our debts on time to avoid another financial crisis [and] pass a bipartisan and comprehensive long-term budget deal by the end of the year."

Mr. Schultz needn't worry about consumers becoming upset that he's meddling in politics. Not this time around, at any rate. In fact, the NRF's ad campaign was driven in part by a Gallup poll that showed consumer confidence plunged 12% during the first week of the shutdown.

The shutdown crisis has been compounded by looming fears over the debt limit. Treasury Secretary Jack Lew says the country will run out of money to meet its obligations Oct. 17 and, if there is no new lending authority from Congress, the subsequent default would plunge the nation—and the globe—into recession.

"If our current government leaders were in corporate America, no doubt, they'd be fired by now," wrote NRF lobbyist David French in a blog post.

The NRF, however, is not keen on the idea of a short-term deal because fighting in Washington would continue to damp consumer confidence, NRF spokeswoman Kathy Grannis said. "If confusion in Washington continues ... retailers will face the impending question of "How do we attract customers when the last thing they want to do is spend money?'" Ms. Grannis said.

Depending on the length, a short-term deal could result in contentious negotiations starting up again in the heart of holiday-shopping season.

If there is good news for agencies—those who don't work for government entities, at any rate—it's that holiday advertising in most cases has been bought and placed already. Indeed, with so much uncertainty in the market, some shops may find themselves cranking out more spots as retailers ramp up promotions to drive traffic.

But there's another reason for adland to worry about a short-term deal. To Dick O'Brien, top lobbyist for ad agency trade group the 4As, anything short of a long-term solution to these fiscal problems would be a disaster.

That's because a short-term deal would hinge on budget negotiations that are likely to include reform of the corporate tax code.

"That would put a lot of pressure on Congress to look at expensing of advertising costs," Mr. O'Brien said.

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