Smith, speaking to the Economic Club of Washington, D.C., said today “both sides” want to avoid the more than $600 billion in tax increases and spending cuts set to take effect early next year.
“The consequences of going over this fiscal cliff are enormous,” Smith said. “It will result in a significant reduction in U.S. GDP, in growth and additional unemployment, and deficits.”
Smith, CEO of the operator of the world’s largest cargo airline, predicted the U.S. economy would grow 2.5 percent in 2013. To expand, the U.S. must reduce dependence on foreign oil, shrink the trade imbalance and lower taxes on corporations, Smith said.
“It’s the people that invent, innovate and invest that are the job creators,” Smith said. “Unless we can restore incentives in the U.S. to invest, we cannot increase our GDP growth rate and we cannot put our citizenry back to work.”
President Barack Obama and Republicans in Congress are locked in a dispute over taxes and spending. Obama has offered $4.4 trillion in deficit reduction over a decade and has vowed he won’t sign any bill that doesn’t raise taxes on top earners.
Republicans, led by House Speaker John Boehner, have countered with a $2.2 trillion package of spending reductions and revenue increases by limiting deductions and closing loopholes. Boehner insists he won’t agree to higher tax rates at any income level.
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