Business Forum on Recommendations from the National Commission on Fiscal Responsibility and Reform
On Monday, December 6th CED hosted a lunch forum featuring members of the President's National Commission on Fiscal Responsibility and Reform (NCFRR), David Cote [play video], Chairman and CEO of Honeywell Inc., and Andrew Stern [play video], former President of the Service Employees International Union (SEIU) and Research Fellow at Georgetown University.
David Cote, who voted in favor of the final recommendations from the NCFRR warned, "As big as you think the debt is - it's bigger." Cote continued, "Even with good economic growth and mitigated growth in health care costs, we end up with a debt of $20 trillion in 2020 - at 90% of GDP. Remember Greece started running into their problems at 115% of GDP. This means that in 2021 our interest bill would be $1 trillion. If you spent $1 million a day since Jesus Christ was born, 2,010 years ago you still would not have spent $1 trillion - and that will be our annual interest bill."
Stern reflected on the dramatic changes in the global economy over the past several transformative innovations in agriculture, industry and technology, which have changed the traditional relationship of business and labor in the United States and abroad. Stern avers that the U.S. lacks a plan for engaging in the international economy that takes these new challenges into account. The Commission proposed a plan that would modernize fiscal relationships within the global economy. "We have a fiscal deficit and we have to fix it. If we don't fix it the bond market will fix it. The Chinese will fix it and we won't like the way they fix it. We are Americans and we can take care of our own needs."
Stern encouraged political leaders to address the lesser known but urgent "investment deficit." Sterns explained that the "PAYGO" model of funding makes funding for investment projects a zero-sum game. It has inhibited investments in infrastructure such as broadband, smart grid technology, updated water systems, and engineers and scientists in education. While he believes that the fiscal deficit is very urgent, he recommends attention to the the investment deficit and the policies that limit action on it.
Cote defended the Commission's recommendations stating, "As dramatic as people think this proposal is - this only brings us back to 60% of GDP until 2024. My concern about this plan was - is this enough? But we have to start somewhere. We have to get the ball moving."
Additional speakers included co-host, Donald R. Caldwell [play video], Chairman & Chief Executive Officer, Cross Atlantic Capital Partners, and a panel including: Charles Kolb, President of CED; budget expert, Joe Minarik [play video], Senior Vice President of CED; and Rob Wonderling [play video], President of the Greater Philadelphia Chamber of Commerce. Minarik cited past bipartisan budget resolutions as a model for possible compromise and other reports such as the Bipartisan Policy Center’s Debt Reduction Task Force Report which offers farther reaching changes to the health-care system. Wonderling expressed the need for regional business leaders to operate in a stable climate. With the debt crisis looming, policy leaders need to act to ensure that working Americans have stable interest rates and access to capital. Many business leaders lack the time to commit to advocate for Congress to reduce the deficit.