More than eighty Chief Executive Officers (CEOs) leading companies in the United States urged the members of the Congress to reduce the federal deficit by spending cuts and tax reforms, and prevent the impending fiscal cliff that could halt the still recovering economy.
In a letter sent to the Congress, the CEOs pointed out that the legislators should acknowledge that the increasing debt of the government is a serious threat to the economy and security of the United States.
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The CEOs told Congress to act immediately in developing a plan to fix the debt of the country, in order to protect the recovering, but still weak, economy. According to the business leaders, the legislators should work in a bipartisan manner, in order to develop a financially and politically successful fiscal plan, which includes reforms in all areas of the budget.
The CEO’s recommended a comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit. In addition, the CEO’s urged legislators to improve Medicare and Medicaid. Furthermore, the executives emphasized that the recommendations of the bipartisan Simpson-Bowles Commission is a good framework for them to develop an effective fiscal plan.
The Simpson-Bowles Budget Plan recommended the reduction of the budget deficit by $4 trillion over a decade, by implementing reforms in the tax code and eliminating popular tax breaks for individual and corporations by $1 trillion, and implementing deep spending cuts in domestic and military programs, starting in 2012. The Commission also recommended ensuring that Social Security will remain solvent for 75 years, increasing payroll taxes on high-income earners, and raising the retirement age slowly, from 67 to 69, by 2075.
The CEO’s said, “an effective plan must stabilize the debt as a share of the economy, and put it on a downward path.” They also suggested a gradual implementation of the plan, so that Americans could prepare for changes in the federal budget.
Aetna (NYSE:AET) CEO Mark Bertolini said, “We are one deal away from fixing the debt and putting our nation back on a stronger economic footing that can restore us to greater job growth. If the Congress can commit to a plan outline as early as possible after the election, it will restore business confidence in our economy and investment will follow.” The CEO’s from other companies support Bertolini’s statement.
Scott Davis, Chairman and CEO of United Parcel Service, Inc. (NYSE:UPS) stated during the company’s earnings conference call that the U.S. economy is in the edge of a fiscal cliff regardless of the outcome the presidential election. He noted the lack of political will among the policy makers to resolve the debt problem of the country. He expressed his support to the Fix The Debt, a coalition organized by former Senator Alan Simpson and former White House chief of staff Erskine Bowles, who served as co-chairmen of the Simpson-Bowles Commission. Bowles started recruiting Wall Street executives earlier this month to join the coalition to lobby Congress to do something about the fiscal cliff.
In reaction to the Wall Street executives, Independent Senator Bernie Sanders, from Vermont, said, “There really is no shame. 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.”