Goldman Sachs chairman and chief executive officer Lloyd Blankfein in Washington, April 27, 2010. THE CANADIAN PRESS/AP, Susan Walsh
TORONTO - Austerity measures are not the best path right now for the United States, the head of U.S. financial giant Goldman Sachs Group Inc said Wednesday.
"You can't austere yourself into a higher GDP," Goldman Sachs chairman and CEO Lloyd Blankfein told a business crowd in Toronto.
"I'm all for implementing budget changes that accelerate over the long term, but in the short term I wouldn't take too much money away from people or cut back on a lot of expenditure programs."
It's also not the time for another stimulus package, he said, but the key for success in the near term will be a balance: holding off on austerity measures while not taking away "the punch bowl."
He said the U.S. is approaching a "fiscal cliff" that would happen if warring politicians in Washington don't get together this fall to extend programs and tax cuts that have helped keep the economy out of recession.
The current problems are self-inflicted and within everyone's power to stop, Blankfein said.
He said the U.S. political system is bringing out the extremes within the two main parties — Republicans and Democrats — rather than the moderates.
It's a "defect" of the system, he said, recalling the debate over the U.S. federal government's debt ceiling last year.
"If moderation is a pejorative...and a guarantee of failure at the polls, which it seems to be in some cases, that's not a good environment for compromise," Blankfein said.
But, he said, these situations have a way of working out and even though the fiscal cliff lies ahead, it doesn't have to be a problem because the "basic guts" of it are good.
© The Canadian Press, 2012
19 Sep, 2012
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Source: http://www.globalnews.ca/Money/us+cant+austere+itself+to+a+stronger+economy+goldman+sachs+ceo+says/6442718128/story.html
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