Billionaire investor (he’s always described that way) Carl Ichan is calling on Congress to start spending. You read that right: Ichan is saying there is a “day or reckoning” coming if the federal government doesn’t spend more to stimulate the economy.
CNBC has the story, in “Icahn: Markets will have ‘a day of reckoning’“:
Billionaire investor Carl Icahn is “extremely cautious” on the U.S. market, he told CNBC’s “Power Lunch” on Thursday.
“I do believe in general that there will be a day of reckoning unless we get fiscal stimulus,” he said, pointing to the Federal Reserve’s maintaining low interest rates, and potentially creating “tremendous bubbles.”
On the fiscal side Icahn argued that “you certainly could do more spending.”
“The Republican party that I used to be more sympathetic with — I’m right in the middle now, although as you know I’m for (GOP front-runner Donald) Trump — but what I would say is Congress is in this massive gridlock obsessed,” he said, explaining that the Republican-controlled Congress is “obsessed with this deficit to a point that I think it’s almost pathological.”
To be fair, Ichan is only saying what many in the business community have been saying for some time: spend – especially on infrastructure.
The U.S. Chamber of Commerce, hardly a liberal tax-and-spend organization, has been asking Congress to invest in infrastructure repair and modernization. This is from their website: “The Chamber believes that allowing our nation’s infrastructure to continue to deteriorate is not an option. It will cost jobs, stunt economic growth, reduce safety, and put us further behind our global competitors.”
Other business leaders feel the same way. The Washington Post on Friday, for example, noted in a story headlined “Big business fears campaign-trail criticisms putting policy priorities at risk” their frustration: “Their [business leaders] agenda is effectively stalled in Washington, where immigration reform and infrastructure spending are dead issues for now…”
The Fiscal Times, launched by conservative investment banking billionaire Peter G. Peterson,describes itself as “offering comprehensive quality reporting on vital fiscal policy, economic and consumer issues.” In February they laid out the problem, in “As Roads Crumble, Infrastructure Spending Hits a 30-Year Low“:
A big part of the problem is that federal investment in infrastructure has dropped by half during the past three decades, from 1 percent to 0.5 percent of GDP, leaving more of the responsibility and finances to state and local governments.
[. . .] But instead of making the infrastructure investments essential to building a stronger economic recovery, the report [by the Center on Budget and Policy Priorities] says, many states have opted instead for cutting taxes and offering corporations tax subsidies in a “misguided approach to boosting economic growth.”
“Tax cuts will spur little to no economic growth and take money away from schools, universities, and other public investments essential to producing the talented workforce that businesses need,” the report contends.
The core problem with economies around the world is lack of demand. Governments have been cutting back in an austerity fever, literally taking money out of their economies. Public investment has fallen almost everywhere. There is no “stimulus” to be found, people are hurting, wages stagnant or falling. The result is a “savings glut,” where those with a lot of money are looking for places to invest, but with the world caught in austerity, no investment looks good because no one has any money to spend. [...]