Business leaders really don't want Washington to go over the fiscal cliff.
But the CEOs of the "Fix the Debt" campaign say they have a much bigger agenda: Their push is not just to head off the economic impact of the fiscal cliff but also to use the negotiations as a springboard for major deficit reduction that includes both tax increases and spending cuts.
The group is pushing to replace fiscal cliff's major austerity measures — averting the impact of taking more than $700 billion out of the economy in 2013 — with an alternative package that would reduce the deficit even more but that would take effect farther down the road.
"This plan should be enacted now, but implemented gradually to protect the fragile economic recovery and to give Americans time to prepare for the changes in the federal budget," the "Fix the Debt" campaign says in a statement supported by more than 80 chief executives, including the heads of Invesco, UPS and Aetna. Such a grand bargain "must be bipartisan," the statement said.
he group seeks to reform Medicare, Medicaid and Social Security and suggest comprehensive, rate-lowering, base-broadening tax reform. The group also advises that Simpson-Bowles recommendations serve as a framework for the plan. (Former White House chief of staff Erskine Bowles is a co-founder of the campaign.)
The CEOs argue that enacting such a deal would not only avert the sudden, sharp deficit-reduction of the fiscal cliff but also boost enough market confidence to spur economic growth in the short term. "We can do this in a 10-year plan that doesn't damage the fragile recovery that we're dealing with. I think that could be a big boost to the markets," Honeywell CEO David Cote said in a Thursday morning press conference before the group rang the opening bell at the New York Stock Exchange.
Simply avoiding the short-term impact of the spending cuts would be "muddling through the middle," giving up the chance to make bigger changes, Cote said. "There’s a great opportunity for some great growth and economic opportunity."
Fix the Debt has raised more than $30 million from business leaders, including support from Pete Peterson, whose foundation also backed the Committee for a Responsible Budget's broad push for deficit reduction. The CEOs will also be pushing out the message to their employees and the rest of the public through townhall meetings and advertising, according to CFRB president Maya MacGuineas, who's spearheading the campaign.
The business leaders who've signed on stress that their campaign is bipartisan and that they're aiming for a centrist compromise on the deficit. The campaign is drawing "support for the radical middle who just wants to do the right thing," Cote said. As such, the business leaders could give cover to members of Congress "who are going to be attacked from the left or the right," explained former Sen. Judd Gregg (R-N.H.) , a co-chairman of the campaign. "You need someone standing behind you saying you're doing the right thing."
Their call to raise more revenue through taxes could also put them at odds with Republicans: Though Romney has similarly called for base-broadening, rate-lowering tax reform, he's insisted on keeping the overhaul revenue-neutral, meaning that tax rates would be lowered enough to counterbalance the tax expenditures and loopholes that would be eliminated.
That said, the CEOs said they aren't giving up their individual companies' efforts to lobby Washington on fiscal policy, or their partisan political donations. But the hope from the grand bargainers is that their push for a big deficit deal will gain new credibility and visibility. President Obama has stressed that a deficit reduction package is a priority.
"It's also an issue I'm very familiar with, having fixed a lot of debt in my career," said JPMorgan vice chairman Jimmy Lee. "And created it!" another member of the group interjected. "And created it," he added, amid the laughter. "As Jamie [Dimon] would say, I got most of it back."