Washington needs to rediscover its ability to compromise and commit to a long-term plan to reduce the nation's debt, the head of the country's second-largest stock exchange said on Monday, warning that lawmakers are flirting with disaster.
Nasdaq OMX CEO Robert Greifeld, in the latest corporate call for congressional action, said lawmakers need to think less about "winning."
Instead, he said Republicans must budge on tax increases, while Democrats must give ground on spending cuts.
"The federal budget must be put on a path to sustainability that can clearly withstand any changes in the political winds that may occur in 2014, in 2016, and beyond. This means additional revenues will need to be raised, including from businesses, by broadening the tax base while reducing the top rates," Greifeld told an audience at the Brookings Institution.
"We also acknowledge that federal spending will need to be curtailed, including spending on our favorite government-funded programs."
Greifeld said the best that the markets can hope for in the short term is for Congress to make a short-term deal to avoid the "fiscal cliff" and then a commitment to focus on delivering a longer-term "grand bargain" on debt reduction during the first half of next year.
Greifeld's speech comes just a few days after President Barack Obama began negotiations with congressional leaders in an effort to stave off the year-end fiscal cliff.
If an agreement cannot be reached, then some $600 billion in spending cuts and tax hikes will kick in starting December 31. The combination of these two things at once could push the country back into a recession, analysts say.
The Obama administration is pushing for Republicans to allow tax rate cuts for the wealthiest Americans to expire, as a way to help raise additional revenue.
Republicans, by contrast, have called for largely relying on spending cuts to tame the national debt, while extending tax rate cuts for everyone.
Greifeld confirmed on Monday he is a part of Fix the Debt, an ad hoc lobby group made up of more than 80 CEOs pushing for long-term deficit reduction.
The group advocates for reforms to entitlement programs like Medicare and Medicaid, as well as "pro-growth tax reform" that would lower rates and raise revenue.
On Friday, Obama and top lawmakers agreed to work on a framework for reforming the U.S. tax code and "entitlement" programs next year.
Although this longer-term plan would not be enough to avert the more immediate fiscal cliff, it is widely seen as an important step toward achieving a compromise.
Greifeld said this longer-term plan for debt reduction is critical because the United States risks being crushed under the weight of its borrowing costs.
"Others have said, and I will say, that we risk losing the U.S. dollar's role as the world's reserve currency if we do not behave responsibly," he said.
(Reporting By Sarah N. Lynch; Editing by Karey Wutkowski and Cynthia Osterman)