Shared sacrifice is key to avoiding the fiscal cliff.
That’s the perhaps surprising takeaway of both a recent letter from and a new economic survey of corporate chief executives, according to the head of the Business Roundtable, the organization behind both.
BRT on Tuesday circulated a letter signed by more than 150 CEOs arguing that all options should be considered in talks to avert the fiscal crisis, tacitly sanctioning tax hikes. And a Wednesday CEO survey confirmed why: they’re still spooked that Congress won’t act to head off the more than $500 billion in spending cuts and tax hikes that comprise the fiscal cliff.
“We’re advocating for everybody to give a little—everything on the table and let’s get something done,” Jim McNerney, the chairman of both BRT and The Boeing Company, said Wednesday on a conference call introducing the results of a fourth-quarter CEO outlook survey. “This is the voice of pragmatism. That’s what we do for a living. We’re pragmatic people every day.”
After releasing the Tuesday letter, the large business lobby came under fire for sanctioning higher taxes that could affect some small businesses, but McNerney defended the new stance. Big businesses and small businesses often have symbiotic relationships, McNerney said, and everybody, including their own large corporations, has to give a little.
Even some executives were “very unhappy that we want to even mention revenues or taxes,” McNerney said. “But everybody’s got to feel a little bit like they’re getting nailed. And then we’ll know we’ve got a deal.”
The fourth-quarter CEO survey results released on Wednesday showed that the six-month economic outlook among chief executives remains depressed. The CEO Economic Outlook Index dropped less than half a point from the third-quarter value of 66. But that number was a huge drop from the 89.1 outlook value in the second quarter of the year.
Some of the optimism from earlier in the year can be regained, McNerney said, if lawmakers do something to avert the fiscal cliff—with corporate tax reform in the mix. His personal view, he said, is that reform should be revenue-neutral. Drop the corporate tax rate, slash deductions, and free up money trapped abroad, he said. But do it in a way that doesn’t increase the corporate tax burden.
But the fiscal cliff isn’t the only drag on CEOs’ economic outlook. Just over a third said regulatory costs were a high concern for the next six months, followed by labor and health care costs. The survey was conducted between Nov. 12 and Nov. 30 and is based on responses from 143 CEOs.