If I were a businessman, I’d be selling defective parachutes to the politicians who are about to jump the country off the “fiscal cliff.”
But if you’re a more-serious type, say a top company exec, why not step up and try to help us avoid the cliff altogether? Why not use some of the power that capitalist critics say you have to pressure Washington to work out a budget deal?
C’mon, get in the fight.
For calamity looms on Jan. 1. That’s when the Bush tax cuts and the payroll tax reduction expire and when automatic spending cuts reached under the debt ceiling deal kick in.
The Congressional Budget Office says that taxes will rise by $399 billion and spending will fall by $100 billion.
About that time we’re also set to again crack against the $16.394 trillion debt ceiling.
Economists across the board warn that a budget impasse will tip the country into recession.
Business executives should care for the obvious reasons.
In the resulting recession, their customers will buy less, they’ll have to cut expenses and make layoffs, and they’ll face yet another period of worrisome uncertainty that will prevent them from doing what they really want to do, grow their businesses and make money.
For some businesses, the building fear of the fiscal cliff is already a drag. A rising number of manufacturers, The New York Times reports, are canceling investments and delaying new hires. And more companies are warning that earnings for the last half of the year could be crimped.
“We’re in economic purgatory,” Alexander M. Cutler, the CEO of Eaton, an Ohio maker of industrial equipment, told The Times.
Evan R. Gaddis, the president of the National Electrical Manufacturers Association, said in the same article: “It’s totally irresponsible and absolutely insane. The two parties are really dug in. Companies are seeing the writing on the wall, and business decisions are now being made on this.”
Business leaders could do more than just hunker down. They could get into the fight by joining the “Fix the Debt” campaign, a coalition of anti-deficit groups that is recruiting executives to its cause.
The coalition is being coordinated by the nonpartisan Committee for a Responsible Federal Budget, headed by Maya MacGuineas.
The Fix the Debt campaign itself has two co-chairmen: Republican Sen. Judd Gregg and Pennsylvania Democratic Gov. Ed Rendell. It was founded by former GOP Sen. Alan Simpson and former Clinton chief of staff Erskine Bowles, the chairmen of President Barack Obama’s National Commission on Fiscal Responsibility and Reform.
You may remember that last year the Simpson-Bowles commission devised a “grand compromise” debt solution that relied on tax reform, revenue increases and spending cuts. But it went nowhere, deep-sixed by other members of both parties on the commission and ignored by Obama.
The goal of the Fix the Debt campaign is to rejuvenate support for a grand compromise. It is raising money and hiring staff and plans to eventually lobby members of Congress in their home districts. It will run ads after the election. Why wait?
An online petition, at www.fixthedebt.org, so far has attracted 140,000 signatures.
For you business executives out there, the campaign has also started a CEO Council. About 70 business executives have joined up, and some of them are beginning to speak out.
Arne Sorenson, CEO of Marriott International, told David Wessel in his Wall Street Journal Capital column that he understands that politicians need courage to compromise. But, he says, “We just encourage them to try. We’ll give you cover.”
Douglas Oberhelman, CEO of Caterpillar Inc., reflects the sensible view, telling Wessel: “I think every American would pay more (in taxes) if they thought spending was going to be cut and the budget balanced.”
The Fix the Debt campaign may in the end be a dollar short and a day late. But if you’re a business leader around the region who’s concerned about the fiscal cliff, you should consider signing on.
Help knock down the fiscal cliff. You’ll not only protect your bottom line, you’ll show that businesses can be part of the solution and not the problem.
And you would do the country a big favor.
Bonus round
It turns out there may be a “confidence fairy” after all.
To those who dismiss the weight of uncertainty on the economy, pay heed to a San Francisco Fed study reported by Bloomberg News.
It posits that the U.S. jobless rate would be about 7 percent instead of 8 percent to 9 percent if we could ease consumer doubt about economic issues and fiscal policy.
“Uncertainty has pushed up the U.S. unemployment rate by between one and two percentage points since the start of the financial crisis in 2008,” say Sylvain Leduc and Zheng Liu, Fed research advisers. “The private sector responds to rising uncertainty by cutting back spending, leading to a rise in unemployment and reductions in both output and inflation.”
