Corporate chief executives ramped up their calls on Monday for US Congress to reach a compromise deal that keeps the looming “fiscal cliff” from crushing the US economy and starts to shrink US debt levels.
CEOs of some of the largest US 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,” United Parcel Service Inc CEO Scott Davis added.
“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 US presidential commission 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 US on a sustainable fiscal path.
Steven Rattner, head of Willett Advisors LLC and former US Treasury 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 the US’ most prominent CEO lobbying group also chimed in, warning on Monday that uncertainty over the year-end fiscal cliff — about US$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 US$1 trillion.
While CEOs have been voicing concern about the fiscal cliff for months, US consumers do not appear fazed yet. US retail sales rose more than expected last month, with increased purchases of everything from cars to electronics, in a sign that consumer spending is driving faster economic growth.
The 1.1 percent jump last month in retail sales reported by the US Department of Commerce beat forecasts and was powered partly by the release of Apple Inc’s new iPhone 5, analysts said. It comes after US consumer sentiment on Friday spiked to its highest level in five years in a Thomson Reuters/University of Michigan Survey taken following a drop in the unemployment rate.
Economists, like CEOs, warn that consumer spending could be hurt by job cuts triggered by fiscal tightening and a snap-back in payroll tax rates that could slice US$1,000 off of an average family’s take-home pay.