Qualcomm CEO Paul Jacobs was one of 80 top corporate executives who launched a campaign last week to get Congress to move immediately to address the nation’s debt.
“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,” said Mark Bertolini, CEO of Aetna and a member of the CEO Council of the Campaign to Fix the Debt.
As a group, these CEOs represent companies hiring more than six million employees.
While investors and others have been focusing on the rapidly approaching “fiscal cliff,” when approximately $600 billion in 2001 and 2003 tax cuts are expected to expire and potentially create significant problems for the economy and financial markets, others are looking beyond Jan. 1 for what is being called the “fiscal canyon.”
That is the stress caused by the more than $16 trillion budget debt that is growing by an estimated $3.8 billion per day.
“This is an American problem that requires an American solution comprised of higher revenue, reduced entitlement spending, reduced discretionary spending, and investment in infrastructure and math and science,” said Dave Cote, CEO of Honeywell and another member of the committee.
To be sure, businesses are hesitant to take any action while there is so much uncertainty. The Friday reading of the gross domestic product — up 2.0 percent in the third quarter — was primarily fueled by consumer spending. Businesses remained cautious with more than $2 trillion in cash sitting on the sidelines.
John Engler, president of The Business Roundtable, said Congressional gridlock has worsened the situation.
“Washington’s failure to work together to address our economic problems, or even do the routine business of government, has created uncertainty and chilled business investment and hiring,” said Engler.
Federal Reserve Board chairman Ben Bernanke has not shied away from commenting on the fiscal cliff or canyon. In his speech at the economic symposium in Jackson Hole, Wyo., in late August, he said these concerns are holding the economy in check.
“It is critical that fiscal policymakers put in place a credible plan that sets the federal budget on a sustainable trajectory in the medium and long runs. However, policymakers should take care to avoid a sharp near-term fiscal contraction that could endanger the recovery,” said Bernanke.
Few doubt Congress will in some way address the fiscal cliff situation when they return from recess following the November election. By that time the leadership of the country will be determined and a plan will be proposed.
“We’ve listened to the CEO Council and heard the consequences of inaction. Businesses aren’t investing in an uncertain economy and are slowing job growth to protect their employees. With the CEOs backing we believe we can successfully push for a comprehensive debt reduction deal,” said Maya MacGuinas of the Committee for a Responsible Federal Budget.