Dear Lloyd Blankfein: The Actual Market Is Not Concerned About US Debt
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With the “fiscal cliff” negotiations underway, Wall Street CEOs have decided now is the perfect time for some concern trolling. They are using the deficit issue as an excuse to push for cutting the social safety net while also reforming (i.e. lowering) the corporate tax rate. From their perspective the smaller the government, the less likely their taxes will be increased.
The latest example is Goldman Sachs CEO Lloyd Blankfein calling for Social Security and Medicare spending to be “contained.” From CBS:
[Scott] PELLEY: Social Security, Medicare, Medicaid?
BLANKFEIN: You can look at history of these things, and Social Security wasn’t devised to be a system that supported you for a 30-year retirement after a 25-year career. … So there will be things that, you know, the retirement age has to be changed, maybe some of the benefits have to be affected, maybe some of the inflation adjustments have to be revised. But in general, entitlements have to be slowed down and contained.
Looking at where Wall Street is actually putting its money instead of its mouth tells a very different story. Long term Treasury rates are historically low. Investors are practically paying the United States government to keep their money safe. The actual market seems completely unconcerned about our deficit at this point.
Given that our economic growth rate is still extremely slow, our unemployment levels are high, poverty is increasing among many groups and our borrowing cost are so low this an idiotic time to focus on reducing the deficit and cutting benefits.
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