Column: Fiscal cliff can be avoided. Here's how.

• Warring factions in Washington are pushing us toward draconian tax increases and spending cuts.
• Freeze all expenses by the federal government, including entitlements, at 2012 calendar year levels.
• This bold move will show the rating agencies positive movement in Washington.

Why should 300 million Americans allow a handful of elected politicians -- the president, Senate majority and minority leaders, speaker of the House, and a few committee chairs -- to march us over the fiscal cliff as if it were inevitable?

By cementing their positions, warring factions in Washington have created the gridlock that is pushing us toward draconian tax increases and spending cuts that will set the economy back for years, and quite likely, put us in a recession. Along with a budget and trade deficit, America is suffering from a leadership deficit just at a time when we can least afford it.

Americans care deeply about reducing or at least containing the federal deficit, and growing jobs. The fiscal cliff helps with one, but at a high cost of the other. Last month, Moody's Investors Service said it will lower the U.S. credit rating if Washington doesn't act. Standard & Poor's has already done so, lowering its U.S. rating by one notch in 2011. As any over-their-head credit card holder knows, a lower credit rating raises borrowing costs and makes it even harder to pay down the debt. This is a real risk, despite any attempt by the Federal Reserve to influence interest rates.

The fiscal cliff might satisfy the rating agencies in the short term by reducing the deficit, but it would also cause a serious slowdown in GDP -- in a word, recession. Instead of more jobs, we would have fewer. Then it becomes a race to keep our GDP from sliding faster than reductions in the deficit. The ratings agencies will be watching for a negative move between those two metrics.

There's still hope

With so little time to legislate a solution, the double-edged sword of fiscal constraint and loss of jobs may seem all but inevitable. But it isn't. I propose the following congressional action that would allow legislators to break the gridlock that is about to take us over the fiscal cliff: Freeze all expenses by the federal government, including entitlements, at 2012 calendar year levels. And postpone the fiscal cliff legislation until Jan. 1, 2014.

This bold move will show the rating agencies positive movement in Washington while protecting us from a recession. And it should be palatable to legislators who refuse to yield on taxes or entitlements. It is not painless; all Americans will share some pain. Most important, it avoids the worst consequences of the fiscal cliff.

Wait for a fresh start

This move will allow the new Congress and president to attack the issues with a fresh approach. They will be more motivated to come up with workable solutions because they will have to live with the consequences of their actions.

Any pinch on entitlements will force everyone to become more productive and look for more creative ways to contain costs. Streamlining and eliminating waste help those who receive services, as well as those who bear the cost: the taxpayers.

This approach requires lobbyists and other special interests to back off their demands. They must realize that any substantive legislation that gets pushed through quickly could create unforeseen problems. It's against their own self-interest, because the wrong medicine will hurt everyone. The legislative cure must be created in a thoughtful, deliberate way.

There is little time left to legislate. But there is enough time to get this simple plan approved. The public should get behind this economy-saving bipartisan move and not allow our elected representatives to add a leadership deficit to our balance sheet.

Ram Charan is an adviser to CEOs, and co-author with Larry Bossidy of the best-selling book Execution.

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