WASHINGTON Top financial industry executives urged the Obama administration and Congress on Thursday to stop automatic fiscal austerity measures from kicking in at year-end, but did not propose fresh ideas for replacing those harsh budget and tax measures.
"The consequences of inaction ... would be grave," members of the Financial Services Forum, an industry trade association, wrote to President Barack Obama and members of Congress in a letter released on Thursday.
The letter, signed by 15 top executives of some of largest U.S. and global financial services companies, points to rising concern that lawmakers will run out of time to seal a deal to avoid sharp tax increases and spending cuts.
With a presidential election leaving the political landscape uncertain, negotiations to avert what has become known as the fiscal cliff are not expected until after the ballots have been counted on November 6 - and that has made many nervous.
If unattended, the impact of the sudden tax hikes and spending cuts could be severe. Independent policymakers, including Federal Reserve Chairman Ben Bernanke, have warned that failure to avert the "fiscal cliff" would cause economic growth to contract sharply and hamper an already fragile recovery.
OBAMA SEES AN END TO DEADLOCK
The White House said on Thursday that the outcome of the election will break the deadlock over the key sticking point - whether to raise taxes on those earning more than $250,000 - and that there will be time to prevent the crunch.
"The president is confident, we remain confident that we can address these issues," White House spokesman Jay Carney told reporters traveling with President Barack Obama on Thursday.
"He said on a number of occasions that he is confident that since the electorate will have spoken on this issue, and will have endorsed the broad consensus that we need to take a balanced approach to these matters, that will compel Congress to move in that direction," Carney said.
If the White House and Congress fail to prevent them, $1.2 trillion in across-the-board spending cuts would start to take effect on January 2 and tax cuts enacted under former President George W. Bush would expire on December 31.
Lawmakers set up the year-end deadline as a spur to achieve a broader deficit-reduction package, but failed to reach such a deal.
The letter from the Financial Services Forum letter is not the first sign that Washington's lack of action in light of the looming threat has caused anxiety in the business community.
Last month, chief executives of some of the largest U.S. companies also urged Congress to step up efforts to avert the fiscal cliff.
In mid-November, Congress is scheduled to begin a post-election legislative session that will consider whether to extend all or most of the Bush-era income tax cuts, as well as several other expiring tax measures. It also will weigh whether to replace the across-the-board spending cuts with more targeted reductions that might be less detrimental to economic growth.
The Bipartisan Policy Center, a think tank, proposed on Thursday that Congress agree to postpone looming tax cuts and spending increases, and turn over the task of cutting the budget deficit by $4 trillion over 10 years to congressional committees.
Lawmakers should enact an initial package of tax and spending measures to serve as a "down payment" on a broader deal, the think tank suggested. It also recommended that Congress should agree on a backstop plan that would automatically become law if lawmakers fail again to reach a fuller deficit-reduction package.