White House officials met with Wall Street executives to urge them to pressure Congress for a deal to avert the so-called fiscal cliff of spending cuts and tax increases, according to two people familiar with the session.
Marc Lasry, managing partner and founder of Avenue Capital Group LLC, and Gary D. Cohn, president of Goldman Sachs Group Inc., were among the executives who gathered at the White House yesterday with Valerie Jarrett, President Barack Obama’s senior adviser, according to the people familiar with the meeting. Obama wasn’t present for yesterday’s gathering, said the people, who spoke on condition of anonymity because they weren’t authorized to discuss it publicly.
The session was the latest in a series of consultations White House officials have held in recent weeks with Wall Street executives and corporate leaders to build support for a deal to prevent more than $600 billion of automatic spending reductions and tax increases from taking effect in January and possibly triggering a recession. Lasry said he had been at a separate meeting at the White House and suggested bringing Wall Street decision makers together to help resolve the fiscal cliff.
“Everybody in that room understands that taxes have to go up,” Lasry said today in an interview on Bloomberg Television. “Republicans are being a little unreasonable right now.”
The meeting took place the same day that House Speaker John Boehner, an Ohio Republican, offered a $2.2 trillion package of spending cuts and new revenue that would raise the Medicare eligibility age and slow Social Security cost-of-living increases. The Obama administration rejected the Republican proposal, saying it didn’t meet the president’s demand for higher tax rates on top earners.
During yesterday’s meeting, White House officials said the administration would be open to concessions on entitlement programs, though not until Republicans give ground on taxes, according to the people. The president also won’t accept any agreement on the fiscal cliff without approval to raise the $16.4 trillion limit on public debt, the people said.
Obama administration officials participating in yesterday’s meeting also included Alan Krueger, chairman of the White House Council of Economic Advisers, and Jason Furman, deputy director of the White House National Economic Council, said the people familiar with the meeting.
Executives in attendance included Barry Sternlicht, founder of Starwood Capital Group LLC; Jamie Dinan, chairman of York Capital Management LP; Bruce Richards, CEO of Marathon Asset Management LP; Wes Edens, co-chairman of Fortress Investment Group LLC; Greg Fleming, head of wealth management at Morgan Stanley; and Josh Harris, co-founder of Apollo Global Management LLC, according to the people.
“The Democrats and the administration are very fixed on revenue increases and tax-rate increases but also have about $1.4 trillion in entitlements they are willing to give,” Richards said today in an interview on Bloomberg Television.
Richards said the administration hasn’t publicized that they are willing to give that much because “they can’t be seen as selling out their own constituents.”
Executives at the meeting talked about earmarking money for education that would result in jobs, energy issues as well as reform of the corporate-tax rate, Richards said.
Financial industry leaders have been drawn into debate in Washington over how to reduce the government deficit, which has exceeded $1 trillion in each of Obama’s four years in office.
Previous meetings with Wall Street executives included an unannounced session on Nov. 16, the same day the president met with congressional leaders to discuss the fiscal cliff. That day, Obama sat down with about a dozen financial executives who were meeting senior administration officials including Treasury Secretary Timothy F. Geithner.
Those present at that gathering included Lasry, Blackstone Group LP President Tony James, Evercore Partners Inc. Chairman Roger Altman and Centerbridge Capital Partners LLC managing principal Mark Gallogly, according to administration officials and a participant in the session who spoke on condition of anonymity.
Goldman Sachs Chief Executive Officer Lloyd Blankfein met congressional leaders on Capitol Hill on Nov. 28 and later that day with Obama at the White House, along with other CEOs including Muhtar Kent of Coca-Cola Co. and Douglas Oberhelman of Caterpillar Inc. After meeting lawmakers, Blankfein said the executives were “obligated to try” to help move toward a fiscal agreement.
Last week, Morgan Stanley Chief CEO James Gorman sent a memo to about 30,000 company employees urging them to press U.S. lawmakers to reach an agreement on the deficit. A copy of his message was obtained by Bloomberg News.
“At the end of the day, I believe there is a deal to be done,” Richards said. “Neither one can come forth at this time and say ’I want to do this’ because it would look bad to their own constituents.”
Lasry also said he sees a resolution of the fiscal cliff.
“It’s going to be closer to the end of the year,” he said. “Which I don’t think is good but that’s sort of how Washington works.”