Corporate leaders warn Congress must strike deficit deal before end of year

The business community is ramping pressure on Washington lawmakers to strike a broad deficit reduction deal during the upcoming lame duck session, with dozens of corporate leaders embarking on a public campaign demanding congressional action. 

ADVERTISEMENT
Over 80 CEOs from some of the world’s largest companies announced Thursday they were calling on Congress and the White House to strike a deficit deal sooner rather than later.

But it remains to be seen whether a visible, but nonspecific, push by high-profile corporate titans can help break the gridlock that made it so difficult to reach a grand bargain on the budget in the 112th Congress.

The effort is being spearheaded by the Campaign to Fix the Debt. The nonpartisan group was founded by Erskine Bowles and Alan Simpson, the two co-chairs of the president’s deficit reduction commission whose surnames are now synonymous with the sweeping deficit reduction plan they produced in 2010.

The group, which now includes the heads of major companies like General Electric, Microsoft, Dow Chemical and Goldman Sachs, plans to embark on a multi-million advertising campaign to press its case.

It is nothing new for big business to air its opinion on Washington policymaking. Countless letters from dozens of industry groups typically flood Capitol Hill inboxes. 

But this new effort marks an increased push that is driven in part by dissipated trust in Washington after last summer’s debt limit standoff.

The group said Thursday it had raised over $35 million in six weeks from private donations, and was eyeing potential ad buys as well as setting up local chapters to push the cause. 

The CEOs also said they planned to make their case to their employees — six million in all — hoping in turn they would carry the message back to their lawmakers.

Several CEOs on Thursday described last August’s protracted fight over raising the debt ceiling as a wake-up call to get more engaged.

Raising the debt limit has always been an issue ripe for political posturing, but last summer’s fight went to the brink and did have repercussions, including the nation’s first-ever downgrade to its credit rating.

“No one in the business community thought for a moment, ‘Well they’re not going to let us default on our debt, are they?’ and it nearly occurred,” said one financial industry leader. “The dysfunction aspect of Washington hasn’t changed.

“We can’t be quiet,” he added.

Now, the stakes are even higher, as a fiscal cliff — the combination of expiring tax cuts and budget sequestration — looms at the end of the year. Many experts believe failure to address the fiscal cliff will lead to another recession.

The extent to which the new corporate campaign can influence the debate on Capitol Hill remains a major question, largely because participants have not weighed in on the particular sticking points in the deficit fight.

The CEOs are adamant that Congress and the White House need to come together to craft a broad, bipartisan deficit reduction deal while averting the fiscal cliff. 

But rather than staking specific claims on the most contentious issues, the campaign has laid out a series of core principles. 

Those principles mention the need to address Medicare, Medicaid and Social Security, as well as overhaul the tax code in a way that broadens the base, lowers rates, increases revenues, and reduces the deficit.

But the principles laid out by the group do not address the specific fights brewing on Capitol Hill, such as whether to raise the marginal tax rates on the nation’s top earners, or what deductions should be eliminated or rolled back as part of comprehensive reform.

“From our standpoint, this is about having every option on the table,” said Jon Romero, vice president of communications for the Campaign. “There’s not a specific plan we’re looking at. It’s just a matter of a framework around a set of ideas.”

The challenge of getting so many executives to agree on such specific issues, coupled with the fact that the landscape of Washington could be substantially impacted by electoral outcomes, makes it difficult for any group to nail down specific solutions ahead of time.

But the group's broad push for action gives both Democrats and Republicans wiggle room on taxes, allowing them to interpret a call for “increased revenue” in different ways.

A senior House Democratic aide said the business community is sending a clear message on tax increases.

“The public already believes that the wealthy should be paying their fair share to reduce the deficit, but since the Republicans refuse to listen to voters, maybe they will listen to corporate America, because the signal they are finally sending couldn’t be any louder,” said the aide.

Some members of the coalition, such as JPMorgan Chase Chief Executive Jamie Dimon, have said they personally would not oppose paying higher taxes if it meant a deficit deal.

But Republicans argue that one can support increased revenue without calling for increased taxes. That's because an overhaul that makes the tax code more efficient could actually lead to lower rates, while also bringing in more revenue from the resulting economic growth. 

The campaign does not come down on either particular side, leaving Congress room to haggle.

One Senate Democratic leadership aide said the letter brought nothing new to the table, and expected it to have minimal impact on the pending debate, if any impact at all.

Another challenge facing the group is that it is effectively pushing for the framework laid out by the Simpson-Bowles Commission, which faced fierce pushback from both the right and the left when it was initially introduced.

Sen. Bernie Sanders (I-Vt.) laid into the CEOs on Thursday, accusing many of them of contributing to the deficit by evading taxes and enjoying specific loopholes.

“There really is no shame,” Sanders said. “The Wall Street leaders whose recklessness and illegal behavior caused this terrible recession are now lecturing the American people on the need for courage to deal with the nation’s finances and deficit crisis. Before telling us why we should cut Social Security, Medicare and other vitally important programs, these CEOs might want to take a hard look at their responsibility for causing the deficit and this terrible recession."

Rep. Jan Schakowsky (D-Ill.), who served on the Bowles-Simpson commission and voted against the plan, was harshly critical of the CEO efforts as well.

“This argument about compromise and everybody paying their fare share … I think it’s a lot of nerve, frankly, to be calling on senior citizens to have their Medicare and their Social Security reduced,” she told The Hill. “We get rid of the tax cuts that went to them, that’s a reasonable conversation to have.”