CEOs press Congress for retreat from fiscal cliff
WASHINGTON, Nov 14, 2012 (Star Tribune (Menafn - Minneapolis) - McClatchy-Tribune Information Services via COMTEX) --Dave Cote, CEO of Honeywell International Inc., didn't mince words.
"If the last debt-ceiling discussion was playing with fire, this time they're playing with nitroglycerin," Cote warned the American people.
His admonishment came in a new radio ad aimed at forcing the House and Senate to make a deal to avoid the so-called fiscal cliff of automatic budget cuts and tax increases that economists fear will plunge the country back into recession in 2013.
Cote, whose company employs about 3,500 people in Minnesota, is among several executives of major U.S. corporations sounding the economic alarm in a new campaign that the Business Roundtable announced Tuesday, called "It's Time to Act."
The move marks the aggressive entry of the nation's corporate elite into the budget debate, with the Business Roundtable acting as their mouthpiece. Ads, videos and website postings aim to pressure politicians to find a way to avoid undermining the country's economic recovery from the Great Recession.
The roundtable represents executives from dozens of major corporate players, including Honeywell and Minnesota-based UnitedHealth Group, Medtronic, Ameriprise Financial, General Mills and Target.
Last year, gridlock between congressional Republicans who refused to raise taxes and Democrats who resisted spending cuts forced a standoff over increasing the national debt ceiling.
The crisis settled into an ongoing game of political chicken involving higher tax rates and mandatory cuts to domestic and defense programs. This threat was supposed to force a consensus that has yet to materialize.
The entreaties of CEOs in the 2011 negotiations were significantly less public, less pointed and, in the end, ineffective.
CEOs "are much more ready to act now than they were a year ago," former Michigan Gov. John Engler, a Republican who is the Business Roundtable's president, said in an interview Tuesday.
Engler said many of the CEOs in his organization are willing to risk "some short-term negatives" to their individual businesses to force national movement in the right direction. "They're fed up with inaction," Engler said.
Engler said the CEOs are not wed to a particular budget strategy except that they would like a long-term increase in the debt ceiling and don't want politicians drawing ideological lines they can't cross. Even a temporary delay of pending cuts and tax increases -- a so-called "patch" -- would be acceptable so long as it leads quickly to serious negotiations on tax reform and spending controls.
"There is an expectation that the president -- who did win a mandate -- will lead," Engler said.
Who's Who of major firms
In addition to Cote, CEOs from Motorola, Xerox, Deere & Co., Mass Mutual and Accenture will offer public calls to action in ads and videos aimed at the U.S. House and Senate.
The two bodies must agree to some kind of strategy by year's end to avoid triggering automatic tax increases and budget cuts in January. Beyond the public pitch, Business Roundtable CEOs will reach out personally to members of Congress and the White House, Engler said.
Cote and 11 other Business Roundtable CEOs are set to meet Wednesday with President Obama.
The president met Tuesday with labor leaders, organizations trying to maintain current Social Security and Medicare and Medicaid benefits and several progressive think tanks that want to reduce budget cuts by raising taxes on America's wealthiest individuals.
Republicans who control the House of Representatives have thus far refused to accept that solution.
Senate Democrats and Obama argue that the president's re-election represents a public mandate to raise taxes on the rich.
"This is all bargaining tactics," said Alfred Marcus, a professor of strategic management at the University of Minnesota. "You don't want to tell anyone what your bottom line is."
As for the business community's influence on the process, Marcus said, "there's a timidity that exists [for executives entering the fight]. If you're a CEO, you owe allegiance to your shareholders. You're not a public official. You're not a think tank. ... If [CEOs] intervene politically, there is the possibility that they step on the toes of somebody they will need later."
How -- or even if -- business leaders can contribute to a resolution remains unclear. The Star Tribune asked to speak to nine CEOs of major Minnesota corporations about the role senior executives will play in pushing the country back from the fiscal cliff and helping solve long-term debt and deficit issues. With the exception of Cote, the corporate leaders declined to talk publicly.
They will work behind the scenes, Engler predicted. "They're willing to talk to their own senators and to sign letters," Engler said. "I try to be their [public] voice."
Other business groups, including the Financial Services Roundtable, which represents banks and financial institutions, have been less forthcoming. The financial roundtable, run by former Minnesota Gov. Tim Pawlenty, sent a letter before the election asking members of Congress and the president to "bridge the fiscal cliff," then work on a long-term budget solution. Pawlenty canceled an interview with the Star Tribune on Tuesday concerning the roundtable's specific plans.
That job falls more naturally to the Business Roundtable, Engler said, "because we represent all business sectors."
Jim Spencer -- 202-383-6123
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