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.