WASHINGTON - America's top executives issued an ultimatum to Congressional leaders and the White House Tuesday:
Make a "market-credible" deal to avoid going over the fiscal cliff, even if it means raising tax rates.
A Who's Who of American CEOs belonging to the Business Roundtable specifically called for tax increases, as well as spending cuts and Social Security and Medicare reform in a brief but strongly worded letter to leaders of the U.S. Senate and House.
Included among the 163 chief executives warning against political paralysis were two from Minnesota: Omar Ishrak of Medtronic Inc. and Gregg Steinhafel of Target Corp.
Leading the corporate leaders' charge against a standoff that could scuttle a debt deal and force automatic spending cuts and tax increases on Jan. 1 was Dave Cote, CEO of Honeywell International Inc., whose company employs 3,000 Minnesotans.
"We don't need to go through another debt-ceiling debacle," Cote told reporters on a press call.
Earlier, the Roundtable had advocated extending the Bush-era tax cuts for a year to provide more time to work out a comprehensive spending and revenue plan.
"I think you'd find most businesspeople in favor of lower government spending, not higher spending, and lower taxes, not higher taxes," Cote said of the Roundtable's initial strategy. "But it gets to a point where you recognize it's important to compromise."
Reforming Medicare and Social Security are essential, he added. But part of the solution to the nation's debt problem "has to be tax increases. That's the only thing that allows a reasonable compromise to be reached."
Although they said a "market-credible" plan likely involved $3 trillion in budget cuts and $1 trillion in revenue increases, the CEOs on the call did not recommend a specific solution.
The controversial nature of suggesting a tax-rate increase was underscored when the International Franchise Association issued a statement calling the Roundtable CEOs "out of touch with what this country needs right now."
But Cote, General Electric CEO Jeffrey Immelt, Dow Chemical CEO Andrew Liveris and Eaton Corp. CEO Alexander Cutler left no doubt that they expected bold, comprehensive action. That includes corporate tax reform, although most deficit reduction plans foresee a decrease in the U.S. corporate tax rate in order to spur job growth.
Regardless of what happens, Roundtable President John Engler said businesses need more certainty in order to invest and create jobs, and going over the fiscal cliff is "job destruction."
The Roundtable's CEOs intend to drive home that point and others in the coming days with personal visits to Washington, as well as advertisements calling for comprehensive action.
Business Roundtable members run companies that employ a total of 16 million people, and on Tuesday the group pledged to get workers involved in lobbying for a debt deal.
The executives' broad public activism contrasts markedly with the behind-the-scenes work they tried with the debt-ceiling negotiations. In that case, partisan intransigence brought the country dangerously close to defaulting on its bills and caused chaos in the financial markets.
"The issue we run into is there are 536 independent contractors between the House, Senate and the president," Cote said. "Part of this process is bringing people along. But you can only do that for so long. ... If you have a system that's geared towards brinksmanship, sometimes you do go over the brink. We don't want that to happen."
Jim Spencer • 202-383-6123