CEOs call for blend of tax hikes, spending cuts to close deficit

Harvard Economist Jeffrey Miron on Federal Reserve policy and concerns over the looming fiscal cliff.


Chief executives of more than 80 big-name U.S. corporations, from Aetna Inc. to Weyerhaeuser Co., are banding together to pressure Congress to reduce the federal deficit with tax-revenue increases as well as spending cuts. 

The CEOs, in a statement to be released on Thursday, say any fiscal plan "that can succeed both financially and politically" has to limit the growth of health-care spending, make Social Security solvent and "include comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit." 

The declaration differs sharply from those of several other business groups, which urge Washington to deal with the deficit and avoid across-the-board spending cuts and tax increases set for year-end-but avoid any stance on the politically charged issue of raising taxes. 

The CEOs who signed the manifesto deem tax increases inevitable no matter which party succeeds at the polls in November. "There is no possible way; you can do the arithmetic a million different ways" to avoid raising taxes, said Mark Bertolini, CEO of Aetna. "You can't tax your way to fix this problem, and you can't cut entitlements enough to fix this problem." 

Mr. Bertolini emphasized that he and like-minded CEOs will resist raising taxes unless accompanied by significant spending restraint. "If someone were to make the argument, we just want to increase revenues so we can increase entitlements, the answer is no," he said. 

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Attempting to create a climate in which compromise is possible, the business executives are stepping into a debate over taxes that is one of the defining differences in the presidential campaign. President Barack Obama says tax increases on upper-income Americans, CEOs included, are an essential and fair element of any deficit-reduction program. Republican candidate Mitt Romney is against raising taxes, but backs a tax overhaul that he says would spur economic growth. 

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