More than 100 of the nation’s business leaders made Thursday an uncomfortable day for President Barack Obama and Gov. Mitt Romney, but a good one for the rest of America.
The corporate executives have come together to push for action on the federal budget deficit and $16 trillion national debt. They recognize that political gridlock is throttling the economy. They have set out to break the stalemate over entitlement programs and taxes and strike a deal to resolve the “fiscal cliff” – the automatic spending cuts and tax increases set to kick in at year-end that could trigger a new recession.
The executives, organized as the Campaign to Fix the Debt, announced on Thursday their key principles for a debt deal. Broadly, it has to reform Medicare and Medicaid, create a more efficient health care system and adopt “pro-growth tax reform” that raises revenues to reduce the deficit. Such a debt-reduction plan has to be implemented in gradual fashion. The recommendations of the Simpson-Bowles commission “provide an effective framework for such a plan,” the executives said.
“When you actually do the math, you find out you have to do all this stuff,” said David Cote, chief executive of industrial giant Honeywell, who signed on to the effort.
Will this much-needed reality check get the attention of Obama and Romney? The CEOs are more candid than the candidates are about what it will take to reach a bipartisan deal to put the nation back on sound financial footing.
The CEO group has the backing of Republican Alan Simpson and Democrat Erskine Bowles, who in 2010 headed the bipartisan commission that informally bears their names. Obama created the commission, then ignored its findings. Republicans dismissed the report, largely because it supported higher tax revenue. Democrats didn’t like the proposed spending cuts. Simpson-Bowles went nowhere, and the partisan impasse brought the federal government to the edge of default in the summer of 2011.
Business leaders have told us that that brinkmanship deeply shook business confidence. The fear that political paralysis would keep the government on a borrow-and-spend track – and possibly to default – discouraged the investment that would create jobs and strengthen the economic recovery.
The chief executives in the Campaign to Fix the Debt speak with authority: As a group, they employ more than 6 million people.
The list includes the bosses at some of the world’s biggest companies – Microsoft, General Electric, AT&T. Illinois-based companies are well-represented – Caterpillar, Deere, Allstate, State Farm, Boeing, Walgreen and Motorola Solutions. We give these corporate chiefs credit for standing up, putting their reputations on the line.
They certainly aren’t spoiling to pay higher taxes. They understand how tax rate hikes can inhibit investment and chill hiring. They’re calling for tax reform that lowers rates, broadens the tax base by curbing deductions and raises revenue.
Mr. Obama, you won’t get there by targeting the wealthy for higher taxes. Mr. Romney, you won’t get there by promising a 20 percent tax rate cut but fudging on what deductions you’d eliminate.
A Romney campaign spokesman responding to the CEOs told The Wall Street Journal that the candidate’s record of “bipartisan success” would achieve “more than the Simpson-Bowles commission ever proposed – balancing the budget within the next 10 years.”
Obama told executives of The Des Moines Register this week that he’s “absolutely confident that we can get what is the equivalent of the grand bargain.” But Obama said that off the record. On the campaign trail, you don’t hear any reassuring words from the president about striking a grand bargain with Republicans.
We understand that the 100-plus business leaders enjoy the great advantage of not having to stand for election Nov. 6. A lot of pols, who do have to appear on the ballot, have calculated that American voters really don’t want to hear candor about Medicare, Social Security and other debt-driven federal spending.
The business leaders spoke the truth. We have to listen.