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Tags: ceo | fiscal | cliff | reid

CEOs to Seek Fiscal Cliff Deal as Reid Laments Lack of Progress

Wednesday, 28 November 2012 09:19 AM EST

Corporate leaders pressing for a solution to the so-called fiscal cliff will make their case at the White House and the Capitol a day after Senate Majority Leader Harry Reid lamented the lack of progress toward a deal.

Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein is among the executives scheduled to meet with President Barack Obama. The president is trying to enlist business support for his campaign to extend tax cuts for middle-income Americans while letting rates rise for top earners.

House Speaker John Boehner, an Ohio Republican, plans to meet separately  with Blankfein and other CEOs. Congress and the president are negotiating on ways to avoid the cliff, consisting of $607 billion in tax increases and spending cuts scheduled to begin in January.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

The meetings with Obama and Boehner, the two chief negotiators, come a day after Reid said Democrats and Republicans have made little headway.

“There’s been little progress with the Republicans, which is a disappointment to me,” Reid, a Nevada Democrat, told reporters Tuesday in Washington.

Following a Nov. 16 White House meeting between congressional leaders and Obama, Republicans backed away from earlier openness to considering new tax revenue as part of a year-end deal to avert the cliff, Reid said.

‘Happy Talk’

“They talked some happy talk about doing revenues, but we only have a couple weeks to get something done,” Reid said. “So we have to get away from the happy talk and start talking about specific things.”

U.S. stocks extended losses as Reid spoke. The Standard & Poor’s 500 Index fell 0.5 percent to 1,398.94 Tuesday in New York. The Dow Jones Industrial Average declined 89.24 points, or 0.7 percent, to 12,878.13.

Other chief executive officers scheduled to meet with Obama include Frank Blake of Home Depot Inc., Ken Frazier of Merck & Co., Muhtar Kent of Coca-Cola Co., Douglas Oberhelman of Caterpillar Inc. and Marissa Mayer of Yahoo! Inc.

Chief executives invited to meet with Boehner include Oberhelman, Thomas Wilson of Allstate Corp., David Cote of Honeywell International Inc. and Mark Bertolini of Aetna Inc.

Reid and House Minority Leader Nancy Pelosi, a California Democrat, also are meeting today with some of the business leaders.

Face to Face

While both parties meet with various stakeholders, Obama and congressional leaders have yet to schedule another face-to-face session. A Democratic congressional aide said Nov. 26 that Obama is delaying inviting the congressional leadership back to the White House this week, as he had planned, because staff-level efforts had made little progress. The aide wasn’t authorized to discuss the talks publicly.

White House Press Secretary Jay Carney told reporters yesterday that it was “wrong” to say that negotiations between the White House and congressional leaders had broken down. He said Obama spoke with Boehner and Reid by telephone last weekend.

“Our team is continuing discussions with their congressional counterparts on this matter and it is entirely appropriate, I would say, both for the president and for leaders in Congress, to have this discussion not just among themselves, but with the American people,” Carney said.

Toy Factory

Obama met with small-business owners at the White House yesterday and plans to travel to a toy factory in Pennsylvania Nov. 30 to build public support for his approach to averting the fiscal cliff at year’s end.

“The target of the president’s rallies should be the congressional Democrats who want to raise tax rates on small businesses rather than cut spending,” Boehner spokesman Michael Steel said in an e-mail.

“Republicans understand that we must avert the fiscal cliff and have laid out a framework to do so that is consistent with the ‘balanced’ approach the president says he wants,” Steel said.

Boehner has said he would oppose increases in marginal tax rates, while suggesting he could support limits on deductions or other ways of increasing taxes on high earners. He has said he wants to take in any additional revenue through economic growth and an overhaul of the tax code.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, yesterday accused Democrats of politicizing the talks.

‘Turning Off’

“My advice to the president would be it seems like our friends on the other side are having some difficulty, kind of, turning off the campaign,” McConnell told reporters.

As their price for considering more taxes, Republicans are demanding structural changes to entitlement programs and an overhaul of the tax code in 2013. They say they are waiting for Obama and congressional Democrats to make an offer on spending cuts.

Deficit-reduction talks can include savings from Medicare, the federal health-care program for the elderly, without raising the eligibility age or turning it into a voucher program, Richard Durbin of Illinois, the Senate’s second-ranking Democrat, said yesterday in a speech at the Center for American Progress in Washington.

Reid and Durbin also said yesterday that an agreement to increase the debt ceiling should be included in any fiscal cliff agreement.

Package Deal

Reid said it would be “foolish” not to insist on a “package deal.”

The U.S. Treasury Department said Oct. 31 it expects to reach the debt limit near the end of this year and can take “extraordinary measures” to meet its payment obligations “until early in 2013.”

A 2011 showdown between Obama and congressional Republicans almost forced the U.S. to default on its debt.

“We’re not going to find ourselves with some big party celebrating in February and turn around in March and have some doomsday scenario with the debt ceiling,” Durbin said.

In an e-mailed update on fiscal-cliff negotiations distributed yesterday, Brian Gardner, senior vice president of Washington research at investment bank Keefe Bruyette & Woods Inc., predicted that “the next three weeks could be a bumpy ride.”

“We expect many headlines that will raise and then dash investors’ hopes that the fiscal cliff will be averted,” Gardner wrote.

Senator Ben Nelson, a Nebraska Democrat, said in an interview he was “concerned” about the lack of progress. “There’s a point where panic will set in, but not yet, apparently,” he said.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

© Copyright 2024 Bloomberg News. All rights reserved.

Corporate leaders pressing for a solution to the so-called fiscal cliff will make their case at the White House and the Capitol a day after Senate Majority Leader Harry Reid lamented the lack of progress toward a deal.
Wednesday, 28 November 2012 09:19 AM
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