Business Chiefs Step Gingerly Into a Thorny Budget Fight

As Democratic and Republican leaders stake out their positions in the coming fiscal showdown in Washington, corporate executives are starting a political campaign of their own.

Business Chiefs Step Gingerly Into a Thorny Budget Fight
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The chief executives taking part in two separate advertising blitzes that are set to begin on Monday and Tuesday are walking a delicate balance. They plan to press Congress to act quickly, even as they publicly steer clear of the political firefight surrounding the details of any far-reaching deal to cut the federal budget deficit.

Behind the scenes, however, the effort by business leaders could play a crucial role in shaping decisions on tax policy, including whether corporate tax rates go down even as individuals pay more.

By framing the issue as an attempt to balance the federal budget, the plan also offers some political cover to Congressional Republicans wary that voting for a tax increase could make them targets of the party's powerful fiscal conservatives.

But a question remains over just how far the business groups will go. In the past, corporations have joined the call for fiscal responsibility, only to resist giving up specific perks and programs that benefit their businesses or offering other specific suggestions for deficit reduction.

The Campaign to Fix the Debt, a new group with a $40 million budget whose backers include Jeffrey R. Immelt of General Electric and David M. Cote of Honeywell, will run more than a million dollars' worth of advertisements. The spots take their cue from well-known ads by the likes of Nike and Dunkin' Donuts and feature slogans like "Just Fix It" and "Time to Fix the Debt."

Mr. Immelt and Mr. Cote also feature prominently in a more traditional campaign by the Business Roundtable, which represents Fortune 500 companies and is one of Washington's most powerful lobbying groups.

The Business Roundtable's effort, set to begin on Tuesday, has a budget of close to half a million dollars, and is focused on news media in the Washington area, including outlets like Politico as well as conservative talk radio shows.

"America's C.E.O.'s have a message for Washington: don't take our country over the fiscal cliff," warns a Business Roundtable commercial, referring to the package of tax increases and automatic spending cuts set to go into effect in January if Congress and President Obama cannot agree on deficit reduction plan.

Experts say that combination would equal a half-trillion-dollar blow to the economy that could cause a recession in the first half of 2013 — a threat the Business Roundtable has made the centerpiece of its campaign. "If Congress does not act, growth will stall, jobs will be lost and our nation's credit will be harmed," the radio ad says.

The debut of the ads in Washington coincides with the return of Congress on Tuesday for a lame-duck session that will take up the fiscal issue.

John Engler, the Business Roundtable's president and a former Republican governor from Michigan, said that whatever solution emerges, "the tax code changes have to be permanent and the budget cuts have to be real."

"Even the president has said the corporate tax rate is too high and needs to come down," Mr. Engler said. "We're in the position of saying everything is on the table."

The new campaign ups the ante in the fight over fiscal policy, which is set to dominate the agenda in Washington through the end of the year, and comes during an increase in lobbying by chief executives on Capitol Hill.

"My sense is that their primary motivation is avoiding recession," said Jared Bernstein, a senior fellow at the liberal-leaning Center on Budget and Policy Priorities and a former economic adviser to Vice President Joseph R. Biden Jr. "But I think the key to whether they are serious or just posturing is the question of taxes, and if they're truly willing to support raising more revenues."

Still, big business has plenty to gain if some elements of what the groups are pushing for were to become law.

The Fix the Debt campaign was created by Erskine B. Bowles and Alan K. Simpson, who were chairmen of a presidential commission charged with developing a blueprint for fiscal change and deficit reduction in 2010, and the group backs many of their recommendations.

Both the Business Roundtable and the Fix the Debt campaign suggest they could pay for the corporate rate reduction by "broadening the base," closing loopholes and eliminating many deductions. Some critics say they doubt that would bring in enough revenue to pay for reducing taxes on corporations, eventually shifting some of the burden to smaller businesses and individuals.

Advocates for low-income and older Americans have also been harsh critics of the Simpson-Bowles plan, saying it would keep tax rates on businesses and wealthy Americans at levels below the historical average, and underwrite that by sharply cutting Social Security and Medicare.

Fix the Debt is also backed by Peter G. Peterson, a longtime deficit hawk who has advocated cutting Social Security and other elements of the safety net to pay for debt reduction. Other corporate backers include Mark T. Bertolini, the chief executive of Aetna, and Gregory Q. Brown, the chief executive of Motorola .

Maya MacGuineas, the head of the campaign, played down the suggestion that the Fix the Debt campaign had a particular agenda.

"We're not advocating specific solutions," she said. The executives backing the campaign, she said, want to "put in place a debt deal. I see this as people who are focused on what they see as a real threat to their businesses and employees."

With the start of the ad campaigns, chief executives will soon find themselves in the middle of one of Washington's toughest political battles in years.

Politicians from across the spectrum say they want to avoid the threat posed by the looming tax increases and budget reductions, but the thorniest issue is likely to be making changes in tax policy. Indeed, even as votes from last Tuesday's presidential race were still being tallied in some states, President Obama and Congressional Republicans began signaling their positions.

The president favors extending Bush-era tax cuts for all but the top 2 percent of earners. House Speaker John A. Boehner said last week that the election was not a mandate for a tax increase, and he has insisted that tax cuts be extended for everyone.

Those positions are so far apart, and so deeply entrenched, that most in Washington expect some short-term extension of the Bush-era cuts to be passed, giving Congress and the White House more time to overhaul the tax system and take on the issue of spending cuts.