Investors have little faith that Obama and congressional Republicans will agree this year on sweeping changes to U.S. entitlement programs such as Social Security and Medicare, and to government tax policies.
Tax Rewrite
On potential legislation that would simplify the 4 million word tax code, 58 percent say only “modest changes” will result this year, with 7 percent expecting a comprehensive rewrite and 29 percent anticipating no meaningful changes.
Republicans say government budget deficits should be reduced by trimming spending on Medicare and Social Security. Without cuts, the two programs will help drive debt held by the public to 103 percent of U.S. gross domestic product by 2040, according to the White House.
Fifty-two percent of investors predict modest changes in spending plans, while 4 percent anticipate a “comprehensive package” and 37 percent say the status quo will remain.
The budget debate will take place as Obama retools his economic team. Geithner, who is scheduled to leave his Treasury post on Jan. 25, is viewed favorably by 51 percent of those surveyed compared with 38 percent who regard him unfavorably.
Jack Lew, nominated by Obama to replace him as Treasury secretary, is a blank slate for investors; 54 percent say they have no opinion about the current White House chief of staff.
Default Unlikely
Ninety-two percent of investors, traders and analysts surveyed say it’s unlikely the U.S. will default on its debt. The wrangling over the U.S. fiscal position has taken a toll on the credit-rating companies’ reputations.
Since Standard & Poor’s downgraded U.S. debt in August 2011, the 10-year yield has fallen from 2.56 percent. In the Bloomberg poll, 26 percent of investors say they don’t value the rating companies’ opinions as much as they once did, while 9 percent say they no longer put any stock in their views. Thirty- one percent say the companies were “never useful,” and 32 percent see the opinions as one among many useful tools.