Worried US business chiefs warned Tuesday that political paralysis is pulling down the US economy and pushing it toward the fiscal cliff.
Twenty days before the cliff deadline, more than 160 chief executives of the Business Roundtable signed a letter urging Democratic and Republican leaders to compromise on long-term tax hikes and spending cuts, saying they would endorse any “market-credible” deal.
“For far too long, political paralysis has fueled global uncertainty that discourages businesses from investing and hiring new workers. This paralysis must come to an end,” they said.
“We pledge our active support for a compromise that includes comprehensive and meaningful tax and entitlement reforms that result in market-credible spending reductions and revenue growth.”
The two parties remained divided Tuesday on reaching a solution that would avert the $500 billion in automatic tax increases and spending cuts slated for implementation from January 1, with economists warning such a harsh program would crunch the economy.
The statement by the Business Roundtable, which is led by Boeing chief executive James McNerney, Andrew Liveris of Dow Chemical, and David Cote of Honeywell International, suggested businesses are increasingly worried about that outcome.
The CEOS said the best deal would be a deficit-reduction program with three times as much spending reduction as tax increases, and with agreement to address long-term financial challenges to the Medicare and Social Security entitlement programs.
But the business leaders said they just wanted the two political parties to compromise.
“To address these challenges with the scale of response required, no options should be precluded from a potential solution,” they said.
“American businesses know how to create jobs and compete in a diverse global market. We are poised and ready to do so if the conditions for growth are set in a comprehensive agreement on the fiscal cliff.”
The business leaders told reporters that the worries about the fiscal cliff and another possible showdown over raising the country’s debt ceiling had left companies reluctant to move ahead on investments and adding workers.
“That is real,” Honeywell’s Cote said of those fears, in a conference call. Companies are holding a lot of money “on the sidelines to be invested.”
Cote expressed particular worry about having a repeat of last year’s battle over the raising of the US borrowing ceiling which saw Republicans push the country to the brink of default in order to extract budget concessions from the Democrat-led White House.
“We don’t need to be seen going through another debt-ceiling debacle,” Cote said.
If the two sides could reach a quick, comprehensive long-term deal, he said, “We could end up with a more robust recovery than anybody has envisioned.”
“Everything that needs to be known is known” to get a deal, he said. “This is doable and we ought to do it.”