CEOs at some of the nation's largest corporations, including nearly a dozen on the Dow Jones Industrial Average (^DJI -0.98%), published a statement this past week calling on Washington to take action to reduce the federal debt.
According to the statement:
Policy makers should acknowledge that our growing debt is a serious threat to the economic well-being and security of the United States. It is urgent and essential that we put in place a plan to fix America's debt. An effective plan must stabilize the debt as a share of the economy, and put it on a downward path.
It then goes on to note that such a plan must limit the growth in entitlement programs as well as provide "comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues, and reduces the deficit."
Given the ongoing election, it's no surprise that the move has turned into a political football. Commentators on the right are enraged at the prospect of higher taxes. In an interview with Fox Business Channel, Steve Forbes dismissed out of hand the prospect of any measure that could increase tax liability. Those on the left, meanwhile, are disturbed by the prospect of cutbacks in entitlement programs. Blogger Felix Salmon characterized the statement as a ridiculous, self-serving manifesto.
Whether or not the statement was meant to be political is disputable. Its choice of timing and purported origin -- the Business Roundtable, a powerful lobbying organization for corporate interests -- lends credibility to the notion that it is.
But there's also reason to believe that it derives from more genuine interests related to uncertainty in the market. As I noted earlier in the week, we're seeing two trends emerge this earnings season.
The first is that companies -- including DuPont (NYSE: DD), Boeing (BA 1.51%), and Caterpillar (CAT -7.02%) -- are beating estimates on the bottom line while missing on the top. In other words, while they can control costs to a certain extent, there's nothing they can do to boost the deterioration in demand. And second, corporations from General Electric (GE 1.30%) to Intel (INTC 1.77%) are tempering forward revenue and sales projections given the uncertainty in Europe and the impending fiscal cliff.
At the end of the day, it's an unfortunate reflection on our current state of affairs that the substance of a message like the one posted by these 80-plus CEOs is dismissed in favor of an obsession with the source and underlying motivation, as well as an irrational and inflexible unwillingness to consider reasonable suggestions to fix what is unquestionably a problem.
