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More than 80 CEOs have signed on to an effort to persuade Congress and the White House to reach a bipartisan compromise after the election that would include spending cuts and new tax revenue to reduce what they say is the unsustainable growth of the national debt.
Several of the business leaders, who spoke Thursday at the opening of the New York Stock Exchange, said uncertainty caused by the so-called fiscal cliff and the rising $16 trillion debt is holding back economic growth and hiring.
“Ultimately economic recovery is about confidence, and it’s very hard to have confidence when you’ve got as much uncertainty as we do around the issues regarding the fiscal cliff and the long-term debt,” said Paul Stebbins, executive chairman of World Fuel Services Corp. “It’s very hard to make long-term capital investment decisions. It’s hard to make hiring decisions.”
Recent government figures show U.S. business investment stagnant even as other economic indicators, including housing figures and consumer confidence, are improving. A Commerce Department report released Thursday showed bookings for non-defense capital goods excluding aircraft were flat in September compared with August.
George Paz, chairman and CEO of Express Scripts, called the debt “the No. 1 problem in our country. It’s inhibiting growth in our corporations. It’s stopping people from hiring.”
The CEOs did not offer any evidence in the form of studies or numbers to buttress their argument that uncertainty or the long-term debt is affecting the economy. The deficit in the 2012 fiscal year that ended on Sept. 30, 2012, totaled $1.09 trillion, according to the Office of Management and Budget, down $207 billion, or 16 percent, from the year before. That marked the fourth straight year of deficits in excess of $1 trillion and U.S. debt now exceeds $16 trillion.
Although the business leaders did not as a group endorse a tax increase, they are backing a tax overhaul that would include an increase in revenue to reduce the deficit — something that many Republicans who oppose a tax increase consider to be a tax increase unless the additional revenue is offset by other tax cuts.
In a statement, the CEOs said they support limiting future growth of Medicare and Medicaid, making changes to Social Security to ensure that it is solvent in the future, and enacting “pro-growth tax reform” that broadens the tax base, lower rates, raises revenues and reduces the deficit.
Other business groups in Washington have taken a position on raising taxes as part of a deficit agreement.
David Cote, chairman and CEO of Honeywell, said a tax increase must be part of the solution. “For anybody who says you can solve this problem through growth, you can solve it through tax increases, you can solve it just through spending reductions — none of that stuff is true. When you actually do the math you find out you have to do all this stuff,” said Cote, who voted for the Simpson-Bowles plan as a member of the president’s fiscal commission in 2010.
The Simpson-Bowles plan proposed cutting the deficit by $4 trillion over 10 years through a combination of spending cuts and a tax overhaul that would lower rates but also bring in additional revenue through eliminating deductions and credits.
In the presidential campaign, GOP candidate Mitt Romney has promised to cut taxes by 20 percent through an overhaul of the tax system, which he says would not increase the deficit. President Obama is campaigning on a pledge to raise taxes for families who earn more than $250,000 a year.
Retired former Senate Budget Chairman Judd Gregg, R-N.H., a co-chair of the Fix the Debt campaign that sponsored the event, said business leaders can provide backing to lawmakers who will have to make “difficult political decisions” to put the nation on a sustainable fiscal course.
Amid re-election pressures, Gregg said, “You need somebody to stand behind you and say you’re doing the right thing.”
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, parent of the Fix the Debt campaign, said the business leaders in the organization are already having an effect on Congress.
“When they go to meet with members of Congress, instead of only talking about their company or their industry, they’re talking about this larger issue,” she said.
The CEOs have raised $30 million, which they plan to spend to raise public awareness through advertising as well as sponsoring educational events throughout the country.
Cote said if Congress and the White House agree in a lame-duck session to the outlines of a plan that includes reducing the deficit by $4 trillion, making a down payment on deficit reduction and having an enforcement mechanism in case Congress does not pass comprehensive legislation in 2013, “I think that could be a big boost to the markets.”