U.S. CEOs call for action to reduce federal deficit

Thu Oct 25, 2012 2:09am EDT

Oct 25 (Reuters) - Chief Executives of more than 80 big U.S. corporations, including Goldman Sachs, JPMorgan and Boeing, are getting together to pressure Congress to reduce the federal deficit with tax reform and spending cuts.

In a letter posted on the Wall Street Journal website late on Wednesday, the U.S. corporate chiefs said it is urgent and essential to put in place a plan to fix America's debt. The letter is due to be released on Thursday.

If Congress fails to reach a deficit reduction deal by the end of the year, it will automatically trigger big spending cuts and tax increases in 2013. This so-called "fiscal cliff" would hit the still-recovering U.S. economy hard.

The U.S. deficit in 2012 will top $1 trillion for a fourth straight year, pushing the national debt past $16 trillion. While the United States currently borrows at record low interest rates, investors worry this will change.

The CEOs' statement was organized by campaign called "Fix the Debt," which is urging Washington to set aside partisan differences to put the United States on a sustainable fiscal path.

"In order to develop a fiscal plan that can succeed both financially and politically, it must be bipartisan and reforms to all areas of the budget should be included," the CEOs said.

The corporate chiefs said the fiscal plan must include "comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit."

Also, as part of the plan, the group urged the government to reform and improve the efficiency of healthcare programs like Medicare and Medicaid.

The CEO group said the recommendations of the bipartisan Simpson-Bowles Commission provides an effective framework for a fiscal plan. The commission's proposal has several options including trimming tax rates for all income groups.

Simpson-Bowles also calls for slashing many popular tax deductions and adding them back only selectively.

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Comments (2)
The US has a sovereign currency system, which means that Congress has the ability to increase the flow of currency into the US economy at any point. The US is a currency *issuer*, not a currency *user*, like the states and the American people. These memes about the dangers of the deficit are misleading. Congress, if they had a sharper grasp of economics and monetary policy, has the capacity to impact the deficit.

Because most US politicians are only being advised about economics and monetary policy, they make under-informed and misguided decisions and further perpetuate misunderstandings about the state of our economy. The China-myth, the myth of the US being broke and approaching Greece, claims that “entitlements” are fiscally irresponsible are all due to false assumptions of how a sovereign currency system works.

The US, UK, Japan (among others) all have a currency system which have built in protections from these kind of *household* fiscal scenarios. The US does not operate like a household, which cannot legitimately increase its own flow of currency when there is a deficit (matched with low unemployment). We have to abandon this analogy. It is inaccurate.

The American people need Congress to urgently recognize this capability to securely increase currency flow before the economy is further stifled and deprives even more people of jobs and other social securities.

Oct 30, 2012 7:05pm EDT  --  Report as abuse
Relevant explanation of how federal spending ACTUALLY works:

“The Fed prevents and cures inflation not by decreasing the supply of dollars, but rather by increasing the demand for dollars — i.e. by increasing interest rates. Don’t any of you “experts” understand the differences between Monetary Sovereignty and monetary non-sovereignty?”

“You can’t borrow water from a lake in the future. No borrowing is needed. Our Monetarily Sovereign government creates dollars by spending dollars. Federal spending does not take dollars from anyone. Unlike state and local taxes, federal taxes don’t pay for federal spending”

“Norquiest’s “lake” analogy is wrong for one simple reason. federal spending does not take dollars from anywhere. Federal taxes do NOT pay for federal spending. We are Monetarily Sovereign. Our government creates dollars by spending. Period.”

Oct 30, 2012 7:46pm EDT  --  Report as abuse
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