Global investors, by an almost 2-to-1 majority, believe the U.S. government won’t be able to substantially cut its budget deficit without raising taxes, rejecting a core stand of congressional Republicans.
Investors are also pessimistic about prospects for a deal to cut the federal deficit, a Bloomberg survey found. Almost 6 out of 10 doubt President Barack Obama and Republicans will reach an agreement by the start of the new fiscal year on Oct. 1, according to a quarterly Bloomberg Global Poll of 1,263 investors, traders and analysts who are Bloomberg subscribers.
“I don’t think raising taxes is a particularly good idea, but it might be the only option,” says Thomas Larsen, a trader at Nordea Treasury in Copenhagen and a poll participant.
Even with pessimism over a long-term deal, more than 7 of 10 poll respondents are confident Congress will raise the $14.29 trillion debt limit and stave off a default on U.S. obligations. The government will run out of options for avoiding default by about Aug. 2, according to Treasury Secretary Timothy Geithner.
Obama’s rise in popularity in U.S public opinion polls since Navy SEALs killed Osama bin Laden isn’t reflected in the president’s standing among investors. In the Bloomberg poll, conducted May 9-10, 35 percent of U.S. investors say they have a favorable opinion of him, compared with 36 percent in January. Sixty-four percent of U.S. investors have an unfavorable view.
http://www.bloomberg.com/news/2011-05-13/global-investors-rebuff-republicans-in-poll-showing-2-to-1-say-raise-taxes.html