Congress, Obama playing with dynamite, CEOs say of "fiscal cliff"
By Scott Malone
BOSTON (Reuters) - Corporate America is raising the volume of its plea that the U.S. government avert a year-end "fiscal cliff" that could send the nation back into recession, but chief executives aren't pushing the panic button just yet.
With a heated election season in the rear-view mirror, executives are calling on the White House and congressional leaders to head off a self-imposed deadline that could bring $600 billion in spending cuts and higher taxes early in 2013 if they are unable to reach a deal on cutting the federal budget deficit.
The Business Roundtable on Tuesday kicked off a print, radio and online ad campaign on which it plans to spend hundreds of thousands of dollars featuring the chiefs of Honeywell International Inc (HON.N: Quote), Xerox Corp XRX.N and United Parcel Service Inc (UPS.N: Quote) calling on lawmakers to resolve the issue.
One of the more dramatic warnings of the consequences of allowing the U.S. economy to go over the fiscal cliff came from Honeywell CEO David Cote.
"If the last debt ceiling discussion was playing with fire, this time they're playing with nitroglycerin," Cote said in an interview. "If they go off the cliff, I think it would spark a recession that's a lot bigger than economists think. Some think it would just be a small fire. I think it could turn into a conflagration."
The nonpartisan Congressional Budget Office estimates that the U.S. economy would contract 0.5 percent in 2013 if the government fails to stop the budget cuts and tax increases - far below the 2 percent growth economists currently forecast.
A failure in Washington to solve the crisis by the year's end could prompt major companies to curtail investment plans, said Duncan Niederauer, CEO of NYSE Euronext NYX.N, operator of the New York Stock Exchange.
"We simply won't be investing in the United States. We will be investing elsewhere where we have more certainty of the outcome," Niederauer said in an interview. Continued...