The US business community is rallying with unusual zeal behind a simple but urgent message: It’s time for politicians to fix the nation’s budget policy.
The urgency comes from the deadline known as the “fiscal cliff,” the tax hikes and federal spending cuts that are scheduled to occur on Jan. 1, perhaps tipping America into recession. Recessions, of course, aren’t good for business.
But corporate leaders aren’t just promoting short-term actions, such as postponing tax hikes. They’re also calling for longer-term reforms to reduce future deficits. In this, too, a self-serving rationale can be seen.
Many chief executive officers worry that future US prosperity – and their own profits – could be in peril if government policies continue to drift toward an ever-rising national debt.
“Our national debt increases about $3 million every minute,” Scott Davis, the CEO of United Parcel Service (UPS), said in a recent speech. “Our leadership needs to ... adapt to the economic realities, take a disciplined approach. And most importantly, act.”
Concern within the business community about America’s fiscal health is nothing new. But today’s high economic stakes have prompted CEOs to speak with a rare level of urgency and coordination. That could make their message an influential one, at a time when Democrats and Republicans have sharp differences on the way forward.
President Obama was poised Wednesday to meet with the leaders of a dozen major US corporations, with the fiscal cliff a central topic.
In a press conference earlier Wednesday, Mr. Obama claimed an election mandate for raising taxes on the wealthiest Americans, but Republican leaders haven’t made clear how far they might budge on that question. Polls suggest that the business leaders’ desire for fiscal compromise is shared by most Americans.
Against that backdrop, here are some of indications of how business groups and CEOs are trying to nudge policymakers toward a deal:
• Their No. 1 message is simply to reduce the size of the “cliff,” probably by postponing most of the tax hikes and spending cuts. Thomas Donohue of the US Chamber of Commerce, for example, recently issued a statement asserting that “the most urgent matter facing the president and the outgoing Congress is to take action before January 1 to stop massive tax increases and indiscriminate spending cuts, which could push our economy back into a recession.”
• Businesses say Congress can’t stop there. The next needed step is longer-term bargaining to control the national debt, via spending restraint, tax reform, and some changes to make Medicare and Social Security less expensive.
• They are launching ad campaigns as well as lobbying efforts. Scores of CEOs are participating in a “Fix the Debt” campaign, backed also by the nonpartisan Committee for a Responsible Federal Budget. On Tuesday, the Business Roundtable announced “It’s Time to Act,” a separate fiscal push by big-company CEOs including Mr. Davis at UPS.
• On Wednesday, some 232 industry and regional groups joined the US Chamber of Commerce in an appeal “to fundamentally restructure our nation’s entitlement programs – Medicare, Medicaid and Social Security – and to put these valued and important programs on a sustainable financial path.”
Of course, even as these calls have grown louder and more organized in recent weeks, it doesn’t mean that the business community is monolithic in its views.
Some corporate leaders are eager to avoid tax hikes if possible, while others – including Goldman Sachs CEO Lloyd Blankfein, writing in Wednesday’s Wall Street Journal – say they generally support a tax increase on the wealthy as part of a fiscal fix.
Some small businesses worry that large corporations, like the 12 that got to meet with Obama, have too much clout and that a fiscal bargain will end up playing favorites with the tax code and spending policies.
Some nonbusiness groups, meanwhile, warn that corporate lobbying on fiscal matters doesn’t necessarily align with the interests of ordinary Americans.
In general terms, though, ordinary Americans and the companies that employ them appear to share the central goals of avoiding recession and taming the national debt.
A Wall Street Journal/NBC News poll last month found that three-quarters of registered voters would support "compromises to gain consensus on the budget deficit, even if it means Democrats would have to accept targeted spending cuts and Republicans would have to accept targeted tax increases."
Such compromise would represent fiscal reform that occurs in a planned way, rather than by pushing the economy over the steep cliff that’s now in place.