Tags: McNabb | policy | uncertainty | economy

Vanguard’s McNabb: Policy Uncertainty Pulled $261 Billion from Economy Since 2011

By Dan Weil   |   Tuesday, 30 Apr 2013 08:07 AM

Uncertainty over economic policy issues, particularly government debt, has subtracted $261 billion from the economy since 2011, The Vanguard Group estimates.

“Quite simply, if firms can't see a clear road to economic recovery ahead, they're not going to hire, and they're not going to spend,” Vanguard CEO Bill McNabb writes in The Wall Street Journal.

“Today, there is uncertainty about regulatory policy, monetary policy, foreign policy and, most significantly, uncertainty about U.S. fiscal policy and the national debt. Until a sensible plan is created to address the debt, America will not fulfill its economic potential.”

Editor's Note:
Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

Without the uncertainty tax, gross domestic product could have grown an average of 3 percent per year since 2011, a substantial improvement over the 2 percent average in fiscal years 2011-12, McNabb says.

So how should we address the debt issue?

“Entitlement reforms, spending reductions and additional tax revenues” are important elements of a solution, he explains. “The key is to provide clarity to businesses, financial markets and everyday savers and investors.

“The U.S. economy has the potential to bounce back, creating the growth and jobs that are so badly needed,” he adds.

But count McNabb as an optimist. “I am confident that our leaders in Washington can make it happen.”

A good piece of short-term news for the debt came out last week: the date the borrowing ceiling hits its limit could be pushed back as far as Sept. 30 from a previous estimate of late August to mid-September, according to the Bipartisan Policy Center.

“A solid economy is certainly part of the story,” said Lou Crandall, chief economist at Wrightson Icap, tells Bloomberg. “Underlying fiscal trends are somewhat stronger than I had anticipated a few months ago.”

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

© 2015 Newsmax Finance. All rights reserved.

1Like our page

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved