As the two dominant parties in the nation's capital appear incapable of compromise regarding the country's debt/deficit problem, perhaps they would be well-served to listen to advice from the corporate sector.
Thursday, CEOs from more than 80 significant companies in America offered just that. Citing the unintended consequences of refusing to resolve the economic morass, the private-sector giants suggested a combination of tax hikes and lower spending is the responsible way to go.
"What it really comes down to is if we still have the political will to be a great country," said Dave Cote, chairman and CEO of Honeywell International.
Cote was joined by the heads of other corporations such as Aetna, Microsoft, JPMorgan Chase & Co., Time Warner Cable, Merck & Co., General Electric, Dow Chemical, Verizon Communications, Bank of America, AT&T and Allstate. The blue chip company bosses said the uncertainty created by inaction is stifling the economy and discouraging them from making large investments or hiring more workers.
The CEOs believe the federal government needs to invest more in the nation's infrastructure and boost education efforts in the fields of math and science. Concurrently, responsible reductions are required in entitlement programs such as Medicare and Medicaid. The group seconds the already-suggested plan to decrease federal spending by $3 for every $1 in tax increases. That should result in savings of some $4 trillion.
Congress decided months ago to basically await the results of the Nov. 6 general election. No matter who's elected president or has control of the House and Senate, the timeline will be short to work out a deal. The so-called fiscal cliff will be reached in early January, at which time sequestration will kick in automatically. Because of an earlier compromise crafted by Congress, if a deficit-reduction plan is not agreed to by that point taxes will go up $400 billion and $100 billion will be cut across the board from federal agencies.
It strikes us that if the private sector agrees to a balanced approach, Congress has the green light to go this route. We still wouldn't expect our elected leaders to act before the election, but there should be no excuses why they couldn't get it done before the end of the year. This is a common-sense plan worthy of pursuit.
Editorial by Patrick Lowry