Our Sponsors:

Read more »

Our Members

Many thanks to Joseph Pentheroudakis and Paul Cavanaugh some of our many supporters.

ALL MEMBERS »

How to pull back from the 'fiscal cliff'

Op-ed: A Seattle business leader recounts the ill effects on business from the uncertainty over our debt and taxation issues. The answer is at hand: Simpson-Bowles.
President Barack Obama addresses a joint session of Congress about jobs.

President Barack Obama addresses a joint session of Congress about jobs. Lawrence Jackson/White House

Throughout the sluggish recovery from our Great Recession, there has been a lot of discussion about what can be done to help the economy get back on its feet and get companies growing, hiring, and investing again. The answer is as simple, if not easy. What American business needs is for the federal government to get its fiscal house in order.

Unfortunately, instead of coming together in a bipartisan manner and enacting a smart, sensible plan to reduce the debt as a percentage of the economy, our leaders in Washington — at least in their public pronouncements — seem content to allow the country to careen toward the “fiscal cliff” we face on January 1.

That cliff is a series of economic events that includes the expiration of the 2001 and 2003 tax cuts, $1.2 trillion in automatic, across-the board cuts in defense and domestic spending (sequestration), an immediate and steep reduction in Medicare physician payments, and the disappearance of the budget patch that protects millions of middle class taxpayers from the Alternative Minimum Tax (AMT).

Allowing these rate hikes and spending cuts to take effect simultaneously would create an immediate fiscal contraction and, according to the non-partisan Congressional Budget Office, trigger a second recession in 2013.

The economic damage isn’t waiting for December to start taking effect. The uncertainty surrounding the fiscal cliff and doubts about whether Congress and the President can work across partisan lines on a plan to stabilize the debt are already negatively impacting the U.S. economy. According to a recent New York Times article, “A rising number of manufacturers are canceling new investments and putting off new hires because they fear paralysis in Washington will force hundreds of billions in tax increases and budget cuts in January, undermining economic growth.”

And the Federal Reserve Bank of San Francisco recently issued a report stating that “uncertainty has pushed the unemployment rate up at least one percentage point in the past three years.”

As the chairman and CEO of Seattle Hospitality Group, a company that serves other companies in conducting meetings and events across the globe, I am acutely aware of the effect that uncertainty has had on our clients and our own business. I am also certain that resolving the looming fiscal crisis and addressing our long-term national debt would go a long way toward reviving the economy.

What’s happening in Washington is simply not right, and it’s no way to run a business; common sense dictates that we need to get the debt on a sustainable path. In the business world, you have to balance priorities and make tough choices. We need our elected leaders to do the same, before it’s too late.

Fortunately, there are real alternatives. In 2010, a comprehensive, credible, and long-term solution was put forward by the President’s National Commission of Fiscal Responsibility and Reform, which produced the report commonly known as “Simpson-Bowles.” Simpson-Bowles would have enacted budgetary savings of more than $4 trillion over the next ten years. It would have gone after every sacred cow, while protecting the most vulnerable in our society and investing in education, infrastructure, and research and development. The plan called for pro-growth tax reform that would rid the tax code of more than $1 trillion in tax expenditures, using those savings to both lower tax rates and reduce the deficit. The plan also addressed rapidly increasing health care costs and put Social Security on sounder financial footing.

Alan Simpson and Erskine Bowles have subsequently co-founded an organization called The Campaign to Fix the Debt, a bipartisan effort to educate Members of Congress, thought leaders, and citizens across the country about the need to address the nation’s fiscal challenges. Participants come from a broad array of political affiliations, interests, and backgrounds and are united in their belief that this is a moment to look beyond self-interest and come together as a nation to restore faith in our government, and reclaim the path to prosperity for future generations. More information about the debt, and the Campaign, is available at their website.


Like what you just read? Support high quality local journalism. Become a member of Crosscut today!

Comments:

Posted Mon, Oct 8, 1:41 a.m. Inappropriate

I'm sure Simpson-Bowles makes sense for you, rich boy.

ivan

Posted Mon, Oct 8, 8:32 a.m. Inappropriate

This must be a quid pro quo for giving money to Crosscut and is the opposite of good journalism.

Posted Mon, Oct 8, 9:09 a.m. Inappropriate

Mr. Wright's professed concern for reduction of the federal debt and his simultaneous opposition to allowing the Bush tax cuts to expire is the definition of cognitive dissonance. Those tax cuts, which President Obama extended, are one of the single largest drivers of the entire federal deficit according to the Center on Budget and Policy Priorities. (The wars in Iraq and Afghanistan were the other biggest components.)

And Simpson Bowles is not the answer, as Paul Krugman has aptly noted:

"So, a public service reminder: Simpson-Bowles is terrible. It mucks around with taxes, but is obsessed with lowering marginal rates despite a complete absence of evidence that this is important. It offers nothing on Medicare that isn’t already in the Affordable Care Act. And it raises the Social Security retirement age because life expectancy has risen — completely ignoring the fact that life expectancy has only gone up for the well-off and well-educated, while stagnating or even declining among the people who need the program most."

http://goo.gl/ZTMC0

Podgorney

Posted Mon, Oct 8, 1:55 p.m. Inappropriate

Podgorney gets it exactly right. As I've said before, folks like Wright don't seem to understand the real economic circumstances of lower- and middle-income Americans and how precarious their situations are. They never tell us how Americans in their 60s, who now depend heavily on Social Security, are supposed to be able to wait longer to become eligibility and receive reduced benefits. President Obama said let's take the best parts of Simpson-Bowles (I for one favor limiting and reforming the mortgage interest deduction) and put together a package from that, which is essentially what Obama tried to do last year in his "grand bargain" negotiations with Speaker Boehner. Let's not forget that Ryan and Cantor and company shot it down.

Posted Mon, Oct 8, 3 p.m. Inappropriate

Although it's completely outside of Simpson-Bowles, I'm in agreement with Mr. Meyer to eliminate the mortgage interest deduction. We are the only English speaking nation that allows it; England, Canada, Australia, NZ all have the same percentage of home ownerhsip as the US.
As to Krugman, well, he's only jobs focused and not debt focused. As a direct employer of several hundred, and as an indirect employer of several thousand associates, I need to have confidence in the future stability of our economy. With this present path of deficit spending and alarming debt, it's nearly impossible to be confident.

hswIII

Posted Mon, Oct 8, 3:23 p.m. Inappropriate

Don't forget that the uncertainty a Republican product. They are the ones who invented the fiscal cliff. They are the ones who killed sensible banking regulation leaving us exposed to the same problems that killed the economy in the first place. They are the ones who want to repeal the ACA. It is Republican recalcitrance that is producing all this uncertainty over which business is wringing its hands. Perhaps business needs to look somewhere else than Republican ideology for the solutions.

Posted Mon, Oct 8, 6:25 p.m. Inappropriate

hswlll, actually the Simpson-Bowles proposal would limit the mortgage interest deduction. And I fully agree with kendallmiller. Wright completely overlooks the cause of the budget uncertainty.

http://www.thedailybeast.com/newsweek/2012/02/05/budget-hawks-alan-simpson-and-erskine-bowles.html
The Simpson-Bowles framework raises revenue by getting rid of tax deductions and loopholes. “Over 180 of them have been plastered into the tax code by the sharpest lobbyists representing the wealthiest interests in America,” says Simpson. One of the most popular is the home-mortgage interest deduction, currently capped at $1 million; Simpson-Bowles would take it down to $500,000.

Posted Tue, Oct 9, 11:41 p.m. Inappropriate

Something that has been missing in this whole debate is the fact that the House of Representatives has, through late September, voted 33 times to repeal the President's health care legislation. Each time it has passed, and each time the result faced 0% chance of advancing beyond dry ink.
Excuse me, but aren't there more important things to be talking about? Like jobs, and the economy? Instead, Cantor's crowd spends its time throwing our jobs and our economy under the bus in a Don Quixote-like quest for...what...? Power?
If they were really patriots they would spend their time working to get the economy going again, instead of doing everything they can to keep it in the mud in the hopes that they can beat Obama and take over.
Simpson-Bowles may be imperfect to some, but it is the best bi-partisan option we have at the moment and we should grab it. Were we to do that, a lot of uncertainty would go away, and investments would be made, people will get hired, and...look out.

Parker

Posted Wed, Oct 10, 8:18 a.m. Inappropriate

US debt, both public and private, at its lowest amount as a percentage of GDP since 2006-
http://www.bloomberg.com/news/2012-10-09/u-s-downgrade-seen-as-upgrade-as-u-s-debt-dissolved.html

Ries

Login or register to add your voice to the conversation.

Join Crosscut now!
Subscribe to our Newsletter

Follow Us »