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US Business Releases 'Deficit Manifesto'

by Mike Godfrey,, Washington

30 October 2012

In what is being called their ‘Deficit Manifesto’, more than 80 CEOs of the United States’ largest companies have written an open letter calling on Congress to fix the country’s fiscal deficit, by way of both government spending cuts and tax increases.

In support of the bipartisan Citizen’s Petition to Fix the Debt, the letter is signed by CEOs from financial and industrial companies such as Microsoft, Goldman Sachs, JPMorgan Chase, Honeywell and Boeing. Some of them also helped to ring the opening bell at the New York Stock Exchange on October 25 on behalf of the campaign.

The letter, which was published in the Wall Street Journal, points to the urgent need for a plan to resolve the US fiscal deficit and “stabilize the debt as a share of the economy, and put it on a downward path”.

The plan, it is said, should be enacted now, but implemented gradually to protect the fragile economic recovery, should be bipartisan to have a chance of success, and should include reforms to all areas of the budget.

For example, the CEOs insist that the plan needs to “include comprehensive and pro-growth tax reform, which broadens the base, lowers (income tax) rates, raises revenues and reduces the deficit”, and to “strengthen Social Security, so that it is solvent and will be there for future beneficiaries”.

With regard to taxes, and to provide an effective framework for such a plan, the letter invokes the recommendations of the Simpson-Bowles Commission report in December 2010, which was not endorsed by Congress but which would have saved USD4 trillion and addressed all parts of the budget.

There is no detail added to the CEOs proposals, but the Simpson-Bowles Commission did advocate discretionary spending cuts, together with reductions in tax rates financed by eliminating or restricting a range of tax expenditures, that would seem to fit with Mitt Romney’s presidential campaign manifesto.

However, the tax revenue increases necessary to the Commission’s deficit reduction plan, as against Romney’s tax revenue-neutral proposals, would also resonate with President Obama’s call for tax increases to form part of any such programme.

In essence, however, the CEOs seem to be looking for Congress to begin to take action immediately on its return after the elections, despite it being a ‘lame duck’ session.

TAGS: tax | economics | fiscal policy | budget | corporation tax | tax credits | United States | tax breaks | tax reform | individual income tax

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