Wall Street says raise taxes.
(Reuters) – A majority of top Wall Street bond dealers and money managers say spending cuts alone cannot solve the U.S. budget problems and tax increases must be part of the mix.
In a Reuters survey conducted on Tuesday, 17 out of 29 fund managers and economists representing major Wall Street bond dealing firms said the Republicans’ favored option of spending cuts alone would not a work. [...]
“I would ask Republicans to come up with new revenues that don’t undermine incentives to work and invest. And I would ask Democrats to recast entitlements in a way that doesn’t compromise the social safety net,” said Bob DiClemente, head of U.S. economic and market analysis at Citigroup in New York.
Every single poll you can find shows that a majority of Americans favor raising taxes on the wealthy. Even a majority of self-identified Republicans and self-identified Teabaggers favor raising taxes on the wealthy. Polls alone obviously aren’t enough to sway the minds of the Republicans though, otherwise we would already have a deal in place.
With the big-wigs of Wall Street chiming in to say that we must raise taxes and preserve the social safety net, I am left asking the question — who exactly are the Republicans protecting? Is this simply a battle to preserve an ideology? The voters have spoken and now Wall Street has spoken. They aren’t being subtle about the risks of Republican brinkmanship either.
“I think the opportunity for the markets to stage a riot is going to be elevated because this is not going to get done before the very last second and it’s not going to be done in a way that’s very satisfying to markets,” said Mitch Stapley, chief fixed income officer, Fifth Third Asset Management in Grand Rapids, Michigan. Fifth Third has $17 billion in assets under management.
He’s right. It’s highly unlikely that a deal will be reached until the very last second, and the only way to restore a truly positive long-term economic outlook to the nation is by raising taxes.
The Center on Budget and Policy Priorities brings us this chart projecting the national deficit from now until the year 2019 and, as you can see, the single largest arbiter of debt is the Bush tax cuts.
By themselves, in fact, the Bush tax cuts and the wars in Iraq and Afghanistan will account for almost half of the $20 trillion in debt that, under current policies, the nation will owe by 2019. The stimulus law and financial rescues will account for less than 10 percent of the debt at that time.
Another thing you can clearly see from this graph is the fact that, absent the messes created by the previous administration, we would otherwise have virtually no deficit. And I’m sure that is what President Obama was referring to during his budget speech when he said that we were on the right track to tackle the future until Bush took office.