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Thu., Oct. 2
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Deficit reduction

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A manifesto signed by chief executive officers of more than 80 companies added their voices to those warning about the national deficit and need to avoid the “fiscal cliff” the country faces if Congress and the White House cannot agree on a deficit-reduction plan.

Congress and the White House have to agree on a plan by year’s end to avoid hundreds of billions of dollars in automatic spending cuts taking effect next year since they could not agree on a deficit reduction plan as required in last year’s agreement to raise the debt ceiling. At the same time, several tax cuts from the Bush and Obama administrations are set to expire.

As an alternative, the CEOs from companies such as Aetna, General Electric, JP Morgan and Honeywell are hoping to avoid the austerity measures with a combination of spending cuts and higher tax revenue.

The CEOs in the “Fix the Debt” campaign called for reform of politically sensitive entitlement programs such as Medicare, Medicaid and Social Security along with reductions in health care costs. Unlike those who want to avoid tax hikes, they also proposed “comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit.”

The CEOs did not endorse specific spending cuts or tax proposals, saying “everything should be on the table.” However, their call to overhaul the tax code hints at eliminating tax deductions and credits that are popular with the middle class to generate more revenue while not actually raising rates.

Deficit reduction is at the top of the list when Congress returns after the election, but the CEOs say that a solution is not an either-or choice but one that must have a combination of cuts and revenue hikes.

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