WASHINGTON (CBS DC) – President Obama sought the advice of Honeywell International’s CEO on reaching a budget plan – and Dave Cote had harsh words for the present state of the U.S. economy.
In a Tuesday interview with CBS Evening News, Cote – who worked on the Simpson-Bowles budget plan – stressed that the country’s debt is staggering and nearly unprecedented.
“Our debt is higher as a percent of GDP today than it has been at any time in our history since the Revolutionary War, with the exception of the end of World War II, when we had a very good reason to be doing that,” Cote told interviewer Scott Pelley. “So we’ve got to do something.”
“Our net debt today, if you include the impact of borrowing from Social Security, is about $11 trillion today, and over the next 10 years grows to about $20 trillion. That means our annual interest bill would be a trillion dollars a year,” said Cote.
“It’s ridiculous,” he stressed.
Dave Cote’s expertise fixing finances is drawn from when he pulled Honeywell out of its own slump. Honeywell is one of America’s largest industrial conglomerates with 130,000 employees. It makes products that range from aircraft parts to household thermostats.
Cote said a deal in Washington has to include big budget cuts and increases in tax revenue. The tax money, he says, could come from reducing deductions.
“We collect $2.2 trillion in taxes, but we give away half of it in credits and deductions,” said Cote.
When asked where to begin the balancing act of cutting the budget while building revenue, Cote provided one politically controversial possibility on the table: Medicare and Medicaid.
“The big nut is going to have to be Medicare/Medicaid, and even though most people don’t want to talk about it…At the end of the day, you can’t avoid the topic, especially with the baby boomer generation retiring. It’s going to literally crush the system.”
Cote concluded in an ominous tone, saying that if Washington doesn’t make a deal by the deadline, the nation will be condemned to two percent growth and eight percent unemployment.