Ram Charan

Fiscal cliff: A modest proposal

November 20, 2012: 1:43 PM ET

We need time to properly reset our national priorities and get our fiscal house in order, so let's push the fiscal cliff to 2014 and go with a tax surcharge on those earning more than $500,000.President Obama Fiscal Cliff

By Ram Charan

FORTUNE -- The job of the President of the United States is often compared with that of a CEO of a large corporation. In both cases, the buck stops at the top.

But while CEOs can make tough calls unilaterally and hold their direct reports accountable for executing them, the President must rally support for his plans from both sides of the political aisle. The checks and balances built into our political system require consensus among political leaders who are accountable to their respective parties and their individual constituencies.

President Obama's challenge in addressing our country's fiscal problem is twofold. He must not only figure out how best to avert the fiscal cliff before the end of the year but he also must do it in a way that garners support among political opponents. The solution must satisfy the ratings agencies so that the United States is not at risk of further downgrades and, at the same time, support economic growth -- and therefore job creation.

Developing a proper balance between austerity and growth is actually the easier part of the equation. The bigger challenge for the President is in creating a consensus of five -- getting himself on the same page with the four most powerful leaders in Congress: House Speaker John Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid, and Senate Minority Leader Mitch McConnell, who then must bring Congress along with them on a proposed solution by January 1.

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While I believe each of these five political leaders wants to resolve the budget issue ahead of the fiscal cliff, it is unlikely that they will be able to resolve their differences in the short period of time before the end of the year.

If we are being realistic about the situation, solving this problem is a task not likely to be done well in 50 days. There simply is not enough time to build a solution that works for the country over the long-term, let alone time to get Congress on board to support it. Unfortunately, each of these four leaders and the President appear to be deeply dug into their respective positions. Policy created now, in haste, will be a poor compromise in which no one has ample time to consider the long-term ramifications.

We need time to properly reset our national priorities and get our fiscal house in order, which is why I propose the following alternative: Congress and the President should agree to extend the fiscal cliff legislation to January 1, 2014, freeze spending for 2013 at 2012 levels, and, along with that, impose a one-time tax "surcharge" for those who earn more than $500,000 annually -- an additional 5% added to the 2012 tax bill of those high income earners. More

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