Investor Coalition Calls on U.S. President and Congress to “Fix the Deficit for Real”
July 26 2011 - 9:48AM
Business Wire
A coalition of public, corporate and union pension plans,
investment advisers and asset managers working for millions of
savers “invested in America” today published the following
nonpartisan Open Letter to President Barack Obama and all members
of Congress calling on the nation’s leaders to “fix the deficit for
real.”
"Addressing the current federal debt ceiling crisis, by
itself, will not fix the entire problem. We would be deluding
ourselves as a nation," the letter said. "If we want strong
economic growth and job creation we must fix the deficit for real,
for good, for the future of all Americans."
The full text of the letter along with the names and
affiliations of all signatories appears below.
A Call to Reason – And ActionAn Open Letter to
America's Elected Leaders
Dear Mr. President and Members of Congress,
We work on behalf of millions of Americans from all walks of
life who are "invested in America." They are leaders of businesses
large and small that want to grow and help America grow; police
officers, firefighters, teachers and nurses who save for their
retirement through pension funds; and investors and entrepreneurs
who have placed their faith in America and its leaders.
The people we serve are the nation’s savers, its innovators and
job creators. They want a strong future for America. But today our
nation’s economic future is in doubt, and so is America’s financial
leadership in the world. Our country faces threats to its economic
well-being that will inflict pain and hardship on all our citizens
for many years to come if we fail to act - and act now.
As a debtor nation, America must show the world that the
nation’s word is its bond. Raising the debt ceiling is vitally
important, but that alone is not enough. The huge budget deficit,
both current and long-range, must be dealt with urgently as
well.
Addressing the current federal debt ceiling crisis, by
itself, will not fix the entire problem. We would be deluding
ourselves as a nation. If we want strong economic growth and
job creation we must fix the deficit for real, for good, for the
future of all Americans.
As custodians of Americans’ savings, we urge Congress and the
Administration to reduce the deficit substantially. Without a
credible action plan to reduce the budget deficit, the U.S. debt
will likely be downgraded by one or more rating agencies.
The idea of America losing its AAA rating was once unthinkable,
but now highly likely if our leaders fail to act. If that were to
happen, six countries, including France and Germany, will
have credit ratings above that of the United States, signaling
America’s diminished ability to pay its debt. And, make no mistake
about it: the consequences of such a downgrade are very real and
very serious.
Interest rates today are low. But a rating downgrade inevitably
means higher interest rates - not necessarily immediately
but over the course of years to come. As a nation, we are
highly dependent on foreign purchases of our debt. With a weakening
US outlook, global lenders will demand a higher return for assuming
the increased risk – and many investors may simply give up on
America and be more likely to seek other places to put their
money.
In addition, the US inflation rate has been much lower than that
of other countries because we are a reserve currency for
investors worldwide. If we are no longer among the highest rated
government borrowers, investors will increasingly seek other
currencies to store their wealth. The decline in the value of the
dollar will intensify inflation risk in the future, which will
further erode our standard of living.
This fallout will be felt all across America. It will mean fewer
and more expensive loans for homes, cars and college expenses as
rates rise and credit becomes even harder to secure than it is now.
The decline in the value of the dollar will eat into retirement
savings. Businesses will find it more expensive to create jobs.
Ultimately and most painfully, economic growth for our nation will
slow for years to come and diminish the quality of living across
America.
Such a devastating outcome is by no means inevitable. We urge
you to act with unity of purpose and spirit of commitment – and to
act now.
BlackRock North Carolina Retirement System UAW Retiree Medical
Benefits Trust Verizon Allianz Global Investors-US Commonwealth
Financial Network Florida State Board of Administration
Jacksonville Police & Fire Pension Fund Legg Mason, Inc. LPL
Financial Public Employees' Retirement System of Mississippi New
Jersey Division of Investment Raymond James Financial, Inc. South
Carolina Retirement System Investment Commission
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