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BlackRock co-founder Barbara Novick on the potential consequences of reaching the fiscal cliff.
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-- over and President Obama voted back and office all eyes now on the fiscal cliff.
Why well because all taxpayers will be hit by this not just the rich.
Many organizations including asset manager BlackRock recently took out ads in major national papers.
Warning about the impending disaster joining me now Barbara know that.
Vice chair and head of government relations for BlackRock it's a pleasure to have you here today thanks so much for coming in to talk about us.
Why -- BlackRock.
Think this is such a big issue.
When you look at the fiscal cliff it's not just about individuals and tax rates it's also about jobs.
If we go over the cliff we raise taxes a lot we have sequestration cuts we actually impact the economy we impact savers.
I'm so what we really did is we went out to our clients and talk to them about it.
Many of them agreed with us co signed a letter with us expressing concern trying to get in front of it.
Interesting not really discussed during the debates.
But the morning after we wake up it's the only thing that you see on all of the shows -- -- -- through it and just today -- came out.
And warned that they would downgrade us downgrade our debt if we didn't do something to prevent the fiscal cliff here's what they said failure to prevent the full range of that tax increases and spending cuts.
Implied by the fiscal clip would likely result in the downgrade of -- talk about some 600 billion dollars I've seen even higher estimates.
It depends on what you include that.
Generally what we're talking about -- -- the bush tax cuts.
We're talking about a patch for the AMT the Alternative Minimum Tax -- talk about the death tax coming into -- full effect here.
And then also huge spending cuts primarily in defense now.
As you mentioned the CBO has said that this is gonna cut growth cut growth dramatically may be as much as one point 3% in the first half.
Do you agree with that -- they have.
Those numbers right.
We do agree with that I would caution you to -- this sequestration cuts the way they were.
Put together.
They're not just about defense there may be disproportionately.
Defense but it's everything it's education.
It's helped it's every sector.
Is going to be subject to cuts from -- -- perspective what does that mean if you're the CEO of a company and you have plan a plan B.
Plan day.
I want a plan for growth and wanna invest in my business plan B I don't know -- I'm gonna have my federal funding I don't know -- programs are going to be cut.
I may have to be laying off employees how do you plan for that as a company.
You know we've had so many CEOs come on the show and others on this network and say.
I'm not investing.
-- not investing in expanding my operations -- not expanding and adding people to the payroll because I don't know what's happening do you think anybody.
This morning felt any more confident about what's happening.
This morning no.
I think as the day played out you saw a few things -- Fitch -- Moody's also put something out think you have the pressure coming from the rating agencies.
-- see speaker Boehner as well as present Obama.
Talking about reaching across the aisle trying to get a deal together.
I think by the end of the days there was probably a little bit different tone than the -- the day started.
Pompano Beach -- to see -- tomorrow looks.
You think the markets will continue to penalize.
Investors as they watch this play out are they gonna get -- Shorts.
Very.
Nervous about this continue to sell off stocks.
I think people are are concerned about uncertainties.
-- -- uncertainty in the business planning affects each of those companies so the sooner -- certainty.
And it if it short term certainty even if it's just knowing we're not gonna go off the cliff.
That would be I think very calming very helpful two million jobs you say got a solution for -- housing market what is that.
Well -- housing markets very complicated.
-- but what we've talked about is a number of different pieces.
One is how do you deal with the underwater homes and the people who really can't get out from under the debt.
Com the other is really restructuring the TSE's.
The concern that we've raised as some of the programs that have been put out -- Are ones that discourage investors from coming back into the market.
To support the housing markets -- -- five trillion dollars of debt that needs private capital to comment.
I'm so we would advocate what I call a holistic solution looking at all the pieces make issue taking investors' concerns into account.
As well as promoting investors getting into the market.
-- Tuesday trying to get more investment yes Barbara thanks for coming nine you are one of the most powerful women on Wall Street it is a pleasure to have you here and and now the powerful women exist on Wall Street thanks for coming and thank you so much.
