Obama invites CEOs to White House to push for tax increases, postponed spending cuts

Neil Munro White House Correspondent
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President Barack Obama on Wednesday will meet with several establishment CEOs at the White House to help win a package of immediate tax increases and postponed spending cuts.

Several of the CEOs are part of the “Fix the Debt” campaign, which is a group with deep ties in Washington’s establishment. The group is formally headed by former Wyoming Republican Sen. Alan Simpson and Democrat Erskine Bowles, but many of its leaders are establishment figures comfortable with a large and growing government.

Simpson and Bowles co-chaired Obama’s National Commission on Fiscal Responsibility and Reform, whose proposals were largely ignored by Obama.

The “Fix the Debt” website does not push either of the two major debt-reduction strategies — government-boosting tax increases or government-shrinking spending cuts.

But the group’s website tilts towards raising taxes, both by suggesting that spending cuts should be postponed and by blaming GOP policies for the debt.

“A credible [debt reduction] plan could help strengthen the recovery by improving confidence and reducing uncertainty, even if [budget] savings don’t start until after the recovery,” reads a statement on the website.

The debt has been boosted by ”increased spending on the wars in Iraq and Afghanistan, unpaid for tax cuts, unpaid for stimulus and job creation bills, and the economic downturn,” according to the website.

In contrast, the website does not blame Obama’s big-government policies for the debt problem, even though they have pushed up annual federal spending by roughly $1 trillion above taxes, added $5 trillion to the nation’s debt and boosted welfare spending. (RELATED: Federal debt per household skyrockets in last three years)

Also, the group’s spokesman — Steve Rattner, Obama’s auto-bailout czar — is publicly pushing for tax increases to curb the nation’s $16 trillion debt.

“Everything has to be on the table — there have to be some revenues, there have to be some spending reductions, and you have to deal with entitlements,” Rattner told MSNBC on Monday.

Under Obama’s policies, the debt is likely to reach $20 trillion by 2016, according to forecasters.

Libertarian and social-conservative advocates and legislators will likely slam the group’s role as another example of Obama-era “crony capitalism.”

Conservatives says debt deals spike taxes and simply slow, rather than reverse, the growth of federal government. For example, a March 2011 deal that raised the nation’s debt limit in exchange for near-term spending reductions of $33 billion yielded actual cuts of only a few billion dollars, critics charged.

GOP leaders in the House of Representatives will likely resist the group’s demands. But the GOP will face intense political pressure from the CEOs; many of the executives’ companies provide both jobs in legislators’ districts and donations to critical campaign funds.

Also, Democratic advocates and media outlets will likely portray the government-allied CEOs as moderate champions of fiscal balance.

But the corporate leaders have a big stake in the pending debate over fiscal policy.

Their revenues and profits would be shriveled by a continued economic slowdown or even by recession, should Washington fail to repair its spending polices. Also, companies that rely on government regulation and spending — such as health care — may suffer unfavorable regulation or spending cuts as the debt crisis gets worse, or if they challenge Obama’s priorities.

The executives’ participation in the lobby group indicates that they think they can gain more — or lose less — if they grab a place at the post-election negotiating table, whether or not they try to oppose a tax increase.

During the pending dispute in Washington, some of the companies’ CEOs likely will hedge their bets by backing GOP legislators.

Some of the group’s members supported Gov. Mitt Romney during 2012 campaign. They include Lloyd Blankfein, the CEO of Goldman, Sachs & Co., whose employees were among Obama’s top donors in 2008.

CEOs have followed this dual-track policy before. During the health-sector talks in 2009 and 2010, prior to passage of the Obamacare law, health-insurance companies negotiated the details of a health care takeover with Obama’s deputies, and also covertly funded an advertising campaign against a federal takeover.

However, many of the “Fix the Debt” group’s CEOs are aligned with big government. (RELATED: Louisiana congressman says Greece-like ‘day of reckoning,’ complete with ‘riots,’ looms in the U.S.)

The group includes the CEOs of several health-insurance companies that are subordinated to Washington’s politics by the Obamacare law. They include the CEOs of Aetna, Merck & Co., and Humana Inc.

The Aetna CEO, Mark Bertolini, has threatened to freeze hiring and cut jobs if no deal is reached to avert the fiscal cliff.

UnitedHealth Group, a regulated health insurer, is also a member of “Fix the Debt.”

Bankers and Wall Street investors are the most prominent sector on the group’s leadership council. They include the heads of major regulated banks, including Jamie Dimon, the CEO of JPMorgan Chase & Co., Brian Moynihan, CEO of Bank of America.

The campaign is being run from the address of another establishment, the Democrat-leaning New America Foundation, at 1899 L St. in Washington D.C.

Rattner is a board member of the foundation.The campaign shares leadership with the Committee for a Responsible Federal Budget, which has copyright marks on text in the group’s website.

Neither the foundation nor the committee include significant numbers of economic libertarians in their leadership.

The executives’ focus on debt is perhaps driven by their fear over Obama’s high-spending policies.

Those policies are driving up the national debt by roughly $1 trillion per year, helping slow economic growth to below two percent a year in late 2012.

Throughout the election campaign, Obama opposed any significant rollback on government spending. In fact, he called for continued government ”investment” in favored economic sectors, and for increased taxation of wealthy people.

So far, Obama has only sought to raise taxes by several percent on people earning more than $250,000 per year.

However, that demand is expected by its advocates to raise only $100 billion a year, generating concerns that Obama will soon seek to raise more taxes on a much wider range of companies, industries and middle-class employees.

For example, Obama may push to raise taxes on Wall Streets dividends and capital-gains revenues. If approved by Congress, that tax increase would likely hammer the income, political clout and social status of bankers and Wall Street investors.

On Tuesday, the White House said it will welcome “leaders from the labor community and other progressive leaders.” AFL-CIO president Richard Trumka and SEIU president Mary Kay Henry are scheduled to meet with the president.

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Neil Munro