The partisan rift over taxes has blocked a deficit-reduction deal for two years, and spilled into the 2012 campaigns. Yet as Republicans and Democrats continue to brawl, business leaders are stepping up pressure on Washington to get a deal done even if it calls for more revenues – including higher tax bills for themselves.
On Thursday morning, more than 80 executives of leading U.S. corporations signed a statement calling for a debt-reduction compromise that would “include comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit.”
Several members of the group – which included highly paid chief executives of financial and industrial corporations who would stand to pay more if President Barack Obama succeeds in his effort to raise taxes on the wealthy – then helped ring the opening bell at the New York Stock Exchange to draw attention to their coalition, Campaign to Fix the Debt. The group has raised $37 million so far for a nationwide public-education and lobbying effort.
Alarmed last year by Washington’s brinkmanship over raising the nation’s debt ceiling, these executives are mobilizing now to avert another such crisis at the turn of the year. After the election, they plan to press the two parties to compromise on a long-term substitute for the pending “fiscal cliff” – the immediate, across-the-board spending cuts and tax increases that otherwise would hit nearly all Americans on Jan. 1, potentially putting substantial new strain on a still-weak economy.
The business leaders’ message contrasts with the campaign rhetoric in both parties. While the wealthy executives seem to answer Obama’s call for “economic patriotism” by their tentative embrace of higher personal taxes, in interviews many of them reject his “pay your fair share” talk as class warfare, and a good number oppose his re-election.
But the business leaders’ position also contradicts the stand of Mitt Romney and other Republicans, who say that all tax increases are “job killers,” that the annual federal budgets can be balanced with spending cuts alone and that any overhaul of the tax code should be “revenue neutral,” neither raising nor lowering the government’s total tax collection.
“To say that you can solve this without increases in taxes is ludicrous,” said David M. Cote, the chief executive officer of Honeywell, a Republican and a former member of Obama’s 2010 Bowles-Simpson fiscal commission. He added, “Most wealthy people get it. They just don’t want to be put in the position, though, where you pay more in the taxes and the profligate spending continues.”
Thursday’s Wall Street event was just the latest, if the most high-profile, of near-daily developments in recent weeks that have seen prominent figures step out of America’s corporate suites to back a deal. They even indicated a willingness to agree to generating more revenues and by implication higher tax bills on themselves – if those are part of a bipartisan compromise that also reduces the long-term costs of the entitlement programs, chiefly Medicare and Medicaid. Those programs are the single-biggest factors driving projections of future, unsustainable federal debt.
On Monday, Jamie Dimon of JPMorgan Chase hosted a Wall Street lunch for about 75 other chief executives to hear from budget experts, including Sen. Mark Warner, D-Va., and Sen. Lamar Alexander, R-Tenn., about what the business leaders could do to promote a bipartisan deal. How, for example, could they persuade Republicans to drop their anti-tax position?
Business leaders “think it’s just really important that we fix this. They’re not into whether the tax rate for higher-paid individuals is 35 percent or 39.6 percent,” said Dimon, an early backer of Obama whose relationship with the president later frayed. He was referring first to the top Bush-era tax rate that high-income taxpayers now pay and then to the Clinton-era rate they face after Dec. 31 if the Bush tax cuts expire as scheduled, as Republicans oppose and Obama supports for high incomes. The campaign’s inspiration is the dormant Simpson-Bowles framework, and the group’s formation is due in large measure to the nonstop proselytizing of the nation’s business community and fundraising by commission co-chairmen Erskine Bowles, former UNC system president and the former White House chief of staff to President Bill Clinton, and Alan K. Simpson, a former Senate Republican leader from Wyoming.
“The business community gets it,” Bowles said. “They absolutely get that it has to be a balanced package with revenues and spending cuts both.”
According to the group’s president, Maya MacGuineas, the money raised is paying for a growing staff of about 35 at a downtown Washington “war-room,” chapters in up to 35 states and, ultimately perhaps, television ads and other help for politicians who need support in taking unpopular positions on tax increases or spending cuts.