Business executives from some of the largest corporations in the country are suggesting tax-increases as a possible solution to reduce the federal deficit, according to an open letter to Congress from more than 80 chief executives published in The Wall Street Journal on Thursday.
Unlike other recent statements from business leaders who have called on Congress to act before the country goes tumbling over the fiscal cliff, but offer no solutions, the CEOs’ letter urges Washington to reduce the deficit through tax-revenue increases and spending cuts. The letter calls for reform to Medicare, Medicaid and Social Security, as well as comprehensive tax reform, by overhauling the tax code and eliminating or reducing deductions, credits and loopholes, which they say will lower rates, increase revenue and ultimately reduce the deficit.
“It is urgent and essential that we put in place a plan to fix America's debt. An effective plan must stabilize the debt as a share of the economy, and put it on a downward path,” the letter said. “In order to develop a fiscal plan that can succeed both financially and politically, it must be bipartisan and reforms to all areas of the budget should be included.”
Among the business leaders behind the letter are chairman and CEO of Goldman Sachs Lloyd Blankfein and Jamie Dimon, chairman and CEO of JPMorgan Chase, both men have been extremely vocal in the movement to pressure Congress to take action to avoid massive tax hikes and spending reductions set to take effect at the end of the year, warning that inaction will be devastating to the economy.
“To the people who are most aware of the consequences, namely people like ourselves who are advisers to companies who have to live in the economy, we sure know what the consequence will be – and it will be awful,” Blankfein said on CNBC earlier this month.
The letter was organized by the Fix the Debt campaign, a bipartisan group led by Republican Alan Simpson and Democrat Erskine Bowles, chairmen of the Simpson-Bowles commission appointed by President Obama in 2010 to assemble a deficit reduction plan. The business leaders call the recommendations from the Simpson-Bowles Commission an “effective framework.”
Though the president did not support the Simpson-Bowles commission in 2010, he has recently announced support for a similar plan to reduce the deficit. He told The Des Moines Register on Tuesday that he is “absolutely confident that we can get what is the equivalent of the grand bargain that I’ve been offering to the Republicans for a very long time.”
The “grand bargain” he referred to is similar to the Simpson-Bowles commission the president rejected in 2010, and would match $2.50 worth of spending cuts for every $1 of new revenue, The Fiscal Times reports.
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