Washington ? Major U.S. companies such as Boeing and Caterpillar warned Congress on Tuesday that thousands of layoffs and steeply lower stock prices could result from the loss of a trade tax break that was ruled an illegal subsidy by the World Trade Organization.

Complicated tax politics in this election year, however, have prevented the Bush administration and Congress from crafting a replacement law to avoid this worst-case scenario or the longer-term threat of retaliatory trade sanctions by the European Union.

Senate Finance Committee Chairman Max Baucus, D-Mont., put the problem this way: “Number one, we’ve got to find a solution. Number two, there is none.”

Corporate executives told the Finance Committee that if the tax break were repealed to comply with last year’s ruling, it would amount to a sudden $5 billion tax increase on exporting companies.

James Zrust, vice president of tax for Boeing Co., said the firm could be forced to shed 9,600 jobs and that its suppliers may have to cut 23,000 jobs.