Prominent executives have been feverishly lobbying Washington to do something about the fiscal cliff, because large tax increases and spending cuts could send the country back into recession. More than 80 CEOs have signed on to a letter laying out basic principles on what a compromise deal should look like.As we get closer and closer to the cliff, no CEO has been as prominent as Honeywell International’s David Cote. A piece from Monica Langley at the Wall Street Journal reveals that he’s been in the centre of the action, to the point where he’s being used to shuttle messages about potential deals back and forth between the opposing sides of the debate.
Cote himself has a stake in the outcome. As a defence contractor, his company’s significant government contracts could be cut should the fiscal cliff hit.
She writes that Cote “is the business executive most in the middle of the fiscal-cliff debate. He and senior White House adviser Valerie Jarrett talk or email several times at all hours every day. At the other end of Pennsylvania Avenue, he visits congressional offices a couple of days weekly, bringing along other corporate titans and a newly funded CEO campaign for a deficit compromise.”
That’s backed up by members of Congress, apparently on a first name basis with Cote:
“People on both sides of the aisle are sending messages through Dave,” says Senate Finance Committee Chairman Max Baucus (D., Mont.). “He’s become an active participant … while warning that companies will continue to hoard cash and cut jobs if we fall off the fiscal cliff.”
Though his personal donations have skewed towards the Republican side this election cycle, Cote’s gotten people angry on that side by claiming that he’d be happy to pay a higher tax rate should it result in a comprehensive deal.
His passion for compromise is admirable, but it’s not as though Honeywell doesn’t have some skin in the game. The company gets 10 per cent of its annual sales from government contracts.
He’s not just a messenger though, he’s a strong advocate of the idea, frequently echoed by other CEOs, that the uncertainty around the fiscal cliff and long term path of the debt keeps them from making hires and investments.
The lobbying really does make sense from a personal and business perspective. Any hit to the wallet from higher income tax rates would be thoroughly outweighed by the benefit to business from avoiding the possible recession from the fiscal cliff.
And though Cote and other CEOs may exaggerate the effect the absence of a long term debt deal has on hiring, it’s not hard to imagine that a bit of clarity would make it easier for them to plan for the future.
Regardless of his motives, Cote has some harsh words for Washington. “I can keep talking about a market-credible fiscal plan…but it’s time to say, ‘You are the leaders—lead.'”
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