Fix the Debt: CEOs launch drive for 'grand bargain.' Is Washington listening?
The Fix the Debt CEOs, who are dedicated to pushing Washington toward a deficit-reducing 'grand bargain,' say they were appalled by the reckless debate over the debt ceiling in 2011.
A dozen CEOs and business leaders rang the opening bell at the New York Stock Exchange Thursday morning with a message for lawmakers in Washington: Come November, youâre going to be hearing a lot more from corporate America about getting the nationâs finances in order.
The business executives were visiting the heart of global capitalism to kick off the more than 80-strong CEO Council of the Fix the Debt campaign.
Fix the Debt, an offshoot of a Washington think tank, is committed to pushing Washington toward a deficit-cutting âgrand bargainâ to solidify Americaâs finances for the next several decades.
Fix the Debt was co-founded by former Clinton White House chief of staff Erskine Bowles and former Republican Sen. Alan Simpson, who together co-chaired the bipartisan National Commission on Fiscal Responsibility and Reform at the behest of President Obama.
The CEOs will play an integral part in a post-election advocacy campaign by raising the issues of long term debt and deficits with members of Congress, holding town halls with their employees and the public, and working with members of Congress to develop policy solutions, said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, the think tank behind Fix the Debt.
The group advocates for an approach to fixing the nation's debt problems that takes no political totems as sacred, breaking with many other business coalitions in advocating both for the necessity of some form of higher taxes â not just more tax revenue through economic growth, as many conservatives desire â and reforms to treasured social programs like Medicare that many Democrats find abhorrent.
The roots of corporate involvement in America's long-term debt picture issue lie in Washingtonâs last financial debacle. Several executives said they felt singed by the harrowing negotiations over raising the debt ceiling in 2011 and chastened by criticism that the business community was asleep while the American economy hurtled toward disaster. They vowed to prevent the countryâs financial soundness from being taken to the brink again, alluding to the sustained threat of a default during the debt-ceiling debate.
âWe donât have the right to be that reckless,â said Paul Stebbins, the executive chairman of World Fuel Services. âWhen you see what happened back inâ August 2011, âit would be irresponsible to not be more proactive about that now. Business doesnât get a pass â nobody gets a pass.â
âIf you go back to the debt ceiling discussion, that really shocked many of us in the business community,â concurred Dave Cote, the CEO of Honeywell, a Fortune 100 global industrial conglomerate, and a former member of Mr. Obamaâs debt commission, which came to be known as Simpson-Bowles.
âWe just thought this was a normal political moment [Washington was] going through, we never thought youâd be this reckless or irresponsible with the countryâs finances,â Mr. Cote continued. âWell, we now have a bunch of people who are trying to say âWe are going to pay attention.â â
The CEOsâ attention comes at a crucial moment for Washington and the nationâs financial future. A looming âfiscal cliffâ of more than $600 billion in higher taxes and lower spending is set to hit the nationâs economy come Jan. 1 with the expiration of the Bush tax cuts and the implementation of the âsequester,â the automatic spending reductions mandated as part of the 2011 debt ceiling deal.Â
Were America to go off the cliff, the nonpartisan Congressional Budget Office estimates, the nation would likely be thrown back into a recession.
Meanwhile, another fight over the debt ceiling looms: many budget experts expect Congress to have to raise the limit again come February of next year.
And all the while the national debt churns north of three quarters of Americaâs gross domestic product (GDP), approaching levels where economists expect it to begin choking off economic opportunity.
âIf the last debt ceiling discussion was playing with fire, this time theyâre playing with nitroglycerin,â Mr. Cote said. Â âItâs important to recognize that the stakes have gone up across the board when you combine the debt ceiling with the fiscal cliff.â
But the path to $4 trillion in debt reduction over the next decade that economists and budget watchers think is necessary to stabilize the countryâs fiscal condition, though, doesnât run through corporate boardrooms. It runs through Congress and the White House.
The CEOs believe they can play a constructive role in the debate by serving as highly-visible nonpartisan referees.
As Steve Rattner, an investment banker who administered the bailout of the auto industry for Obama, said, âCEOs can do math.â
And when you do the math, the CEO Council argues, the orthodoxy of partisans in both the Democratic and Republican camps of only increasing taxes or only reducing government spending simply donât add up.
Yet the political calculus of advocating for such one-sided proposals does.
Thatâs where the CEOs come in. They hope to be able to stand up for members of Congress who have the courage to step into the political minefield of fixing the nationâs finances.
âYou need somebody who is going to stand behind you and say âyouâre doing the right thing,â â as former Republican Sen. Judd Gregg, a co-chairman of the Fix the Debt effort, put it.
Thatâs well understood by the members of the CEO coalition.
âThe political process needs cover,â said Stebbins in an interview on the floor of the NYSE. âYouâve got a highly polarized electoral climate. Itâs not for us to tell Congress or the policymakers what to do, but it is important to give them a framework that sets sort of the boundaries, if you will, for a conversation.â
But the group faces a medley of challenges including a partisan, gridlocked Congress, expectations for tax reform on a timeline that many in Washington find overly ambitious, and the extreme difficulty of working out the specifics of the grand debt reduction deal they seek.
But theyâre clear about the goal line that theyâre putting their time and money (Fix the Debt has raised some $30 million to fund its advocacy) toward.Â
âSome companies tinker, just sort of tinker around the edges,â said Jimmy Lee, vice chairman of JP Morgan, the largest US bank by assets. âOther companies on the other hand really recognize the problemâŚ and start thinking about the 20-, 50-, 100-year future of the company and spend some time trying to fix it in a really big, material way.âŚ What weâre hoping for is the latter.â