(In Nov. 13 story, corrects spelling of company name in
penultimate paragraph to "Becton Dickinson" instead of "Beckton
* Top CEOs to meet with Obama on Wednesday
* Lawmakers "playing with nitroglycerin"-Honeywell CEO
* Business Roundtable kicks off ad campaign featuring CEOs
* Uncertainty hurting recovery, executives said
By Scott Malone
BOSTON, Nov 13 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
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, Xerox Corp and United Parcel
Service Inc calling on lawmakers to resolve the issue.
In an opinion piece published on Tuesday evening on the Wall
Street Journal's website, Goldman Sachs Chief Executive Officer
Lloyd Blankfein urged the business community and the Obama
administration to compromise and reconcile so as not to derail
the fragile recovery.
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
The nonpartisan Congressional Budget Office (CBO) 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, 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.
About a dozen top U.S. CEOs, including General Electric Co's
Jeff Immelt, Aetna Inc's Mark Bertolini, American
Express Co's Ken Chenault and Dow Chemical Co's
Andrew Liveris are scheduled to meet with President Barack Obama
on Wednesday to discuss the issue.
The four are members of "Fix the Debt," an ad-hoc lobbying
organization that this week launched an advertising campaign
that advocates long-term debt reduction.
Bank of America Corp CEO Brian Moynihan said on
Tuesday that worries about the cliff have companies holding off
"That uncertainty continues to hold back the recovery,"
Moynihan said, speaking at an investor conference in New York.
Sandy Cutler, CEO of manufacturer Eaton Corp, shared
"Until we solve the fiscal issues (in the United States and
Europe), you're not going to get back to normal GDP growth,"
Cutler told investors on Tuesday.
CEOs are not alone in this worry. The CBO report warned that
failure to reach a deal could push the U.S. unemployment rate up
to 9.1 percent, the highest since July 1991. It is currently 7.9
Obama and the Republican leadership of the House of
Representatives have signaled a more conciliatory tone since
last week's election, when Obama soundly defeated Republican
challenger Mitt Romney, whose party retained a majority in the
Wilbur Ross, an investor known for taking stakes in
distressed companies, is bracing for higher tax rates in 2013.
"We, like many people, have been trying to utilize gains
this year. It does seem that the probability is that rates will
go up," Ross said in an interview with Reuters Insider. "We
don't have a "for sale" sign on anything. But we are mindful
that there is a benefit to concluding things this year rather
NO SIGNS OF PANIC
Concerns about the cliff have not prompted customers to
cancel orders, though they have added to an overall level of
uneasiness that has companies wary of making large capital
purchases or hiring significant numbers of new workers.
"We haven't seen the panicking, like, 'I'm not going to
order something because of the fiscal cliff,'" said Steve
Shawley, chief financial officer of heating and cooling systems
maker Ingersoll Rand Plc. "Customers are being very
judicious with their orders."
Likewise, JPMorgan Chase & Co CEO Jamie Dimon last
month told investors he did not expect the negotiations to hurt
lending in the fourth quarter.
"The fiscal cliff isn't going to change us," Dimon said,
referring to JPMorgan's commercial bank, which loans money to
businesses. The bank's investment banking side could be more
vulnerable if the debate makes investors jittery, he allowed.
WEAPONS, MEDICINES IN THE CROSS-HAIRS
The defense and healthcare sectors are the most vulnerable
to the fiscal cliff, as they face the threat of sequestration --
automatic, across-the-board cuts to their funding.
Makers of weapons systems note that they have long been
preparing for declining sales as the United States winds down
two long wars in Iraq and Afghanistan. The industry has already
shed tens of thousands of jobs and closed facilities.
Lockheed Martin Corp's new president and chief
operating officer, Marillyn Hewson, told analysts on Monday her
company had been preparing for tighter defense budgets for
years, even before the sequestration deal.
"We aren't going to see a major change," said Hewson. "We've
been very proactive as a leadership team in taking actions in
recent years to address our cost structure, to look at how we
can make our product more affordable."
Automatic cuts to the federal budget could reduce federal
health spending by $21.5 billion in 2013, potentially affecting
everything from Medicare to the Food and Drug Administration,
according to an analysis by PwC's Health Research Institute.
Vincent Forlenza, the CEO of Becton Dickinson & Co,
said the labs he supplies have held off on buying new
instruments because of the threat of spending cuts.
"If we don't get to a deal we will have another year of
paralysis and putting off research," Forlenza said. "The impact
of uncertainty on the (National Institutes of Health) budget is
causing our research customers to put off research."
(Additional reporting by John McCrank, Nick Zieminski, Caroline
Humer, Jed Horowitz, Sharon Begley and Daniel Wilchins in New
York, Rick Rothacker in Charlotte, North Carolina, Nichola Groom
in Los Angeles, Andrea Shalal-Esa in Washington, Debra Sherman
in Chicago and Anna Driver in Houston; Editing by Patricia Kranz
and Steve Orlofsky and Carol Bishopric)