Honeywell CEO argues sequester may be best bet to cut spending

The United States might be better off allowing the across-the-board spending cuts of the so-called sequester to take effect as a first step in cutting its debt, even if the move slows the economy, Honeywell International Inc Chief Executive Dave Cote said on Wednesday.

"We need the reduction," said Cote, whose company sells systems to the U.S. Department of Defense and would feel a direct hit from the $85 billion in cuts that could take effect on March 1. "You could argue that the reduction would make more sense if we did it thoughtfully and spent a lot of time on it. I'm not sure that's a real option, though. The options seem to be let it happen or take it away."

After several months of lobbying the Democratic White House and Republican lawmakers to reach a deal to reduce the national debt through the Fix the Debt group that he was a lead voice of, Cote said even painful steps may be better than inaction.

"While there could be some economic impact, to me it looks like $100 billion on a $3.5 trillion government spend," Cote told reporters after addressing the Boston College Chief Executives' Club. "So yeah, there's some impact but at some point we have to start working to get our debt under control and if this is the only rational step they could seem to take to do it then they ought to do it."

"Fix the Debt" is an ad-hoc lobbying group of CEOs who banded together late last year to urge the White House and lawmakers to reach a deal to cut the nation's debt without allowing the U.S. economy to go over a "fiscal cliff" of spending cuts and tax hikes that could have sent the economy back into recession.

As it was, worries about the standoff hit confidence and corporate spending in the final weeks of 2012, contributing to an unexpected 0.1 percent decline in U.S. gross domestic product in the fourth quarter.

A new standoff is brewing between President Barack Obama, a Democrat, and the Republican majority in the House of Representatives over another, $85 billion round of across-the-board spending cuts that could take effect on March 1.

(Reporting By Scott Malone; Editing by Bernard Orr)