Group of major CEOs urges tax hikes, spending cuts

WASHINGTON—CEOs from more than 80 major US companies are pressing Congress to reduce the federal deficit by raising taxes and cutting spending. The deficit and how to tame it has become a key theme in the presidential campaign. They warned in a statement issued yesterday that the uncertainty spawned by the deficit, which has topped US$1 trillion for four consecutive years, is dampening businesses' hiring and investment and stifling the fragile economic recovery.

The CEOs said the solution requires a combination of higher taxes and reduced government spending including on entitlement programs such as Medicare and Medicaid. They also seek federal investment in infrastructure and math and science education. “What it really comes down to is if we still have the political will to be a great country,” Dave Cote, chairman and CEO of Honeywell International Inc., said in a statement.

The CEOs head a diverse array of corporations, including Aetna Inc, Microsoft Corp, JPMorgan Chase & Co, Time Warner Cable Inc, Merck & Co Inc, General Electric Co, Dow Chemical Co, Verizon Communications Inc, Bank of America Corp, AT&T Inc and Allstate Corp.

The group endorses the proposals of a special bipartisan commission that called for about US$3 in spending cuts for every US$1 in tax increases to save around US$4 trillion. Republican politicians and lawmakers have vigorously opposed tax increases.  Republican presidential nominee Mitt Romney would lower deficits mostly through deep spending cuts and eliminating unspecified tax deductions. He also wants to lower the top tax rates on corporations and individuals.

President Barack Obama has proposed reducing the deficit by slowing spending gradually, to avoid suddenly tipping the economy back into recession. He would raise taxes on households earning more than US$250,000 and impose a surcharge of 30 percent on those making more than US$1 million.

The deficit, the shortfall created when the government spends more in a year than it collects, currently has the government borrowing about 31 cents for every dollar it spends. A year-end deadline looms for Congress and the White House to work out a deal on the deficit.

Otherwise across-the-board spending cuts and tax increases will automatically kick in, slicing about US$100 billion from federal budgets and raising taxes by US$400 billion as the nation goes over the so-called “fiscal cliff” in early January.