Washington needs to rediscover its ability to compromise and commit to a long-term plan to reduce the nation's debt, the head of the country's second-largest stock exchange said on Monday, warning that lawmakers are flirting with disaster.
Nasdaq OMX CEO Robert Greifeld, in the latest corporate call for congressional action, said lawmakers need to think less about winning.
Instead, he said Republicans must budge on tax increases, while Democrats must give ground on spending cuts.
The federal budget must be put on a path to sustainability that can clearly withstand any changes in the political winds that may occur in 2014, in 2016, and beyond. This means additional revenues will need to be raised, including from businesses, by broadening the tax base, while reducing the top rates, Greifeld told an audience at the Brookings Institution, referring to corporate tax rates.
We also acknowledge that federal spending will need to be curtailed, including spending on our favorite government-funded programs.
Greifeld said the best that the markets can hope for in the short term is for Congress to make a deal to avoid the year-end fiscal cliff and then commit to deliver a longer- term grand bargain on debt reduction during the first half of next year.
Greifeld's speech comes a few days after President Barack Obama began negotiations with congressional leaders in an effort to stave off the fiscal cliff, a combination of spending cuts and tax increase in early 2013 meant to cut the federal budget deficit, but that also tip the economy back into recession.
If an agreement cannot be reached, then some $600 billion in spending cuts and tax increases will kick in starting Dec. 31. The combination of these two things at once could push the country back into a recession, analysts say.
The Obama administration is pushing for Republicans to allow tax rate cuts for the wealthiest Americans to expire as a way to raise additional revenue.
Republicans, by contrast, want to largely rely on spending cuts to tame the national debt, while extending the lower tax rate for everyone.
Why hasn't the government taken any action? Let's be candid about this. Putting aside the rhetoric and posturing of the past two weeks, the behavior in Washington in recent years confirms that we've lost the ability to compromise, Greifeld said.
On Friday, Obama and top lawmakers agreed to work on a framework for