While few people expect real fiscal reform in the always partisan lead up to the November election, Lloyd Blankfein writes that there may still be hope, if President Obama, Congress and Mitt Romney declare that Simpson-Bowles will be the basis of future reform.
I read Lloyd Blankfein's op-ed at Politico this morning and I found myself in agreement with a lot of what he said (the piece was about investing in America). One area I disagree with him on is the chance of any kind of fiscal accord taking place without a massive battle. Blankfein thinks it may be possible to avoid, I hope he's right but I don't think so...
Make progress on the long-run fiscal situation: Economic and investment sentiment suffered last year as a result of the congressional standoff over the federal debt limit. In the end, however, that debate produced $900 billion of debt reduction and an additional $1.2 trillion of spending cuts over 10 years, which will be mandated by sequestration if no other action is taken.
Realistically, while few expect a fiscal reform agreement before the November election, we should not discount the value of a declaration by congressional leaders of both parties, as well as President Barack Obama and former Massachusetts Gov. Mitt Romney, that Simpson-Bowles will be the basis of future reform. Simpson-Bowles presented a serious, responsible and bipartisan effort to improve the long-term fiscal outlook. Embracing its broad conclusions will send the right message to investors and corporate managers that we will make progress on our long-run budget challenges — and that now is the right time to commit capital and invest in the U.S.
Guess we shall see.