US CEOs urge compromise on US fiscal cliff and debt

US CEOs urge compromise on US fiscal cliff and debt

US CEOs urge compromise on US fiscal cliff and debt

A woman walks by Capitol Hill in Washington DC. US CEOs have ramped up their calls on Congress to reach a compromise deal that keeps the fiscal cliff from crusing the US economy. REUTERS photo

Corporate chief executives ramped up their calls on Oct. 15 for Congress to reach a compromise deal that keeps the looming “fiscal cliff” from crushing the U.S. economy and starts to shrink U.S. debt levels.

CEOs of some of the largest U.S. companies said that Congress will need to raise taxes on the wealthy and cut federal benefit programs like Medicare and Social Security to effectively shrink federal debt and safeguard economic growth.

Their message runs squarely against long-held partisan positions on Capitol Hill, where Republicans have resisted any revenue increases to reduce deficits and Democrats have largely vowed to maintain popular entitlement programs.

“There has to be shared pain,” Robert Greifeld, chief executive of stock exchange operator Nasdaq OMX Group Inc , told a Bloomberg Television roundtable.

“It’s very difficult for politicians to run on a platform where they’re getting everybody mad at them. But for us to address this, there’s going to have to be revenue increases. There are going to have to be spending cuts,” Greifeld said.

“We need compromise,” added Scott Davis, CEO of United Parcel Service Inc.

“It’s not going to get solved on one party’s wishes. Simpson-Bowles lit the path forward. It was a good plan,” Davis told the Bloomberg Roundtable, referring to the 2010 presidential comission that recommended both tax hikes and spending cuts. Simpson-Bowles’ prescriptions were never adopted.

The corporate chieftains are among 100 CEO members of a campaign called “Fix the Debt,” which is urging Washington to set aside partisan differences to put the United States on a sustainable fiscal path.

Steven Rattner, head of Willett Advisors LLC and the former U.S. Treasury’s auto industry “restructuring czar,” said that CEOs were converging on solutions that are “balanced and where everything is on the table.”

“For the first time, there is tremendous support in the business community even if it isn’t exactly what everyone in the business community would want to see,” Rattner said.

The head of corporate America’s most prominent CEO lobbying group also chimed in, warning on Monday that uncertainty over the year-end fiscal cliff - some $600 billion in looming tax hikes and automatic spending cuts - is choking off hiring and investment.

Business Roundtable President John Engler, a former Republican governor of Michigan, also called for compromise - Simpson-Bowles style - in a speech to the Detroit Economic Club.

“I think the American people care about the future of their country, and they understand there’s going to have to be a compromise,” Engler said. “Our present course is unsustainable and unfair to future generations.”

Republicans in Congress have long resisted any revenue increases - especially through higher tax rates - as part of any deal to cut deficits, which just ended a fourth year above $1 trillion.
President Barack Obama’s Democrats have been pushing for higher tax rates for those making over $250,000. However, in a debate last week, Vice President Joe Biden said he wanted higher taxes on those making over $1 million.

Earning calls seek clarity

As corporate America’s third-quarter earnings season gathered steam this week, CEOs emphasized the importance of Congress shielding the fragile U.S. economy from massive tax hikes and spending cuts.

“In the U.S., there are promising signs that more robust economic growth is within reach, assuming the resolution of the fiscal cliff,” Citigroup CEO Vikram Pandit told a conference call. “Lack of a resolution of the cliff situation would be highly disruptive.”