How to address the nation’s budget deficit and make Social Security solvent were among several proposals outlined today by Robert L. Reynolds, president and chief executive officer of Putnam Investments, at a speech at the National Press Club in Washington, D.C. In his remarks, Reynolds, a longtime advocate of reforming the nation’s public and private retirement systems, outlined a unique series of reforms he called “The New Solvency” to stimulate job growth, address the nation’s Social Security shortfall and help reduce the federal budget deficit.
“Our country is at a historic inflection point between decline and renewal. We can either keep drifting toward what has been called the ‘most predictable economic crisis’ in our history – outright insolvency – or we can act to re-boot our economy and reclaim our future,” said Reynolds. “I am confident that we can control our own destiny as a nation, and, through shared sacrifice, meet the challenges we face by moving toward a new economic model – a New Solvency – grounded in higher savings and investment, sustainable growth, new business formation, job creation and fiscal sustainability.”
The urgency of what Reynolds called for in his remarks is reflected in the results of a survey of 1,000 Americans conducted in the past week by Putnam who contracted with Insight Express. Among the findings of the survey, which Putnam released today:
- Americans were nearly unanimous (95%) in saying they are concerned about the federal budget deficit, with three-quarters (72%) saying they are “very” or “extremely” concerned about the deficit.
- By a three-to-one margin, Americans prefer to balance the budget by cutting spending instead of raising taxes; nearly half (45%) said that cutting defense spending was the single best way to close the federal budget deficit, including a third (31%) of self-identified Republicans. An additional 20 percent preferred reducing domestic spending and 11 percent reducing spending for Social Security, Medicare and other entitlements.
- Balancing the federal budget is Americans’ top choice among a list of national spending priorities, chosen by one-third (36 percent), ahead of healthcare reform, Social Security solvency and fighting terrorism.
- Three-quarters of Americans (72%) said Social Security is a key source of retirement income for many millions of working people and must be fixed for the long term.
- Two-thirds of Americans (70%) think that a tax incentive to hire American workers would help to stimulate job growth. Nearly half of those surveyed (49%) support a 10 percent reduction in corporate income taxes for companies that increase their U.S. workforce by one percent.
Reynolds proposed steps to create jobs and generate economic growth in the near term and lay the foundation for long-term growth through tax and regulatory changes within the context of reducing the deficit. “The proposals by President Obama’s deficit reduction panel are an important contribution to a national dialogue on how to balance the budget,” said Reynolds. “Together with steps to generate jobs and growth – both now and in the long term – deficit reduction is a means to creating sustainable prosperity for the American people.”
In his remarks, Reynolds called for complementing deficit reduction with measures to reform the nation’s public and private retirement systems, making Social Security solvent and finalizing proposals to increase private savings through expanded access to 401(k) plans and IRAs. He also proposed measures to create jobs and support new business formation, such as making federal research and development tax credits permanent, offering new tax breaks for depreciation of plants and equipment and new federal corporate tax credits for companies which hire more U.S.-based workers.
Calling for a fundamental shift from tax policies that encourage debt and consumption to policies that reward savings, investment and production, Reynolds also proposed supporting new businesses through a multi-year holiday on capital gains taxes from any initial public offering that an investor holds and bringing talent to America by issuing a 10-year green card to any foreign student who graduates from a U.S. university and wants to work in this country.
About Putnam Investments
Founded in 1937, Putnam Investments is a leading global money management firm with over 70 years of investment experience. The firm was recently named “Mutual Fund Manager of the Year” by Institutional Investor. At the end of October 2010, Putnam had $118 billion in assets under management. Putnam has offices in Boston, London, Frankfurt, Amsterdam, Tokyo, Singapore, and Sydney. For more information, visit putnam.com.
Putnam mutual funds are distributed by Putnam Retail Management.