NEW YORK--(BUSINESS WIRE)--A coalition of public, corporate and union pension plans, investment advisers and asset managers working for millions of savers “invested in America” today published the following nonpartisan Open Letter to President Barack Obama and all members of Congress calling on the nation’s leaders to “fix the deficit for real.”
"Addressing the current federal debt ceiling crisis, by itself, will not fix the entire problem. We would be deluding ourselves as a nation," the letter said. "If we want strong economic growth and job creation we must fix the deficit for real, for good, for the future of all Americans."
The full text of the letter along with the names and affiliations of all signatories appears below.
A Call to Reason – And Action
An Open Letter to America's
Elected Leaders
Dear Mr. President and Members of Congress,
We work on behalf of millions of Americans from all walks of life who are "invested in America." They are leaders of businesses large and small that want to grow and help America grow; police officers, firefighters, teachers and nurses who save for their retirement through pension funds; and investors and entrepreneurs who have placed their faith in America and its leaders.
The people we serve are the nation’s savers, its innovators and job creators. They want a strong future for America. But today our nation’s economic future is in doubt, and so is America’s financial leadership in the world. Our country faces threats to its economic well-being that will inflict pain and hardship on all our citizens for many years to come if we fail to act - and act now.
As a debtor nation, America must show the world that the nation’s word is its bond. Raising the debt ceiling is vitally important, but that alone is not enough. The huge budget deficit, both current and long-range, must be dealt with urgently as well.
Addressing the current federal debt ceiling crisis, by itself, will not fix the entire problem. We would be deluding ourselves as a nation. If we want strong economic growth and job creation we must fix the deficit for real, for good, for the future of all Americans.
As custodians of Americans’ savings, we urge Congress and the Administration to reduce the deficit substantially. Without a credible action plan to reduce the budget deficit, the U.S. debt will likely be downgraded by one or more rating agencies.
The idea of America losing its AAA rating was once unthinkable, but now highly likely if our leaders fail to act. If that were to happen, six countries, including France and Germany, will have credit ratings above that of the United States, signaling America’s diminished ability to pay its debt. And, make no mistake about it: the consequences of such a downgrade are very real and very serious.
Interest rates today are low. But a rating downgrade inevitably means higher interest rates - not necessarily immediately but over the course of years to come. As a nation, we are highly dependent on foreign purchases of our debt. With a weakening US outlook, global lenders will demand a higher return for assuming the increased risk – and many investors may simply give up on America and be more likely to seek other places to put their money.
In addition, the US inflation rate has been much lower than that of other countries because we are a reserve currency for investors worldwide. If we are no longer among the highest rated government borrowers, investors will increasingly seek other currencies to store their wealth. The decline in the value of the dollar will intensify inflation risk in the future, which will further erode our standard of living.
This fallout will be felt all across America. It will mean fewer and more expensive loans for homes, cars and college expenses as rates rise and credit becomes even harder to secure than it is now. The decline in the value of the dollar will eat into retirement savings. Businesses will find it more expensive to create jobs. Ultimately and most painfully, economic growth for our nation will slow for years to come and diminish the quality of living across America.
Such a devastating outcome is by no means inevitable. We urge you to act with unity of purpose and spirit of commitment – and to act now.
| BlackRock |
| North Carolina Retirement System |
| UAW Retiree Medical Benefits Trust |
| Verizon |
| Allianz Global Investors-US |
| Commonwealth Financial Network |
| Florida State Board of Administration |
| Jacksonville Police & Fire Pension Fund |
| Legg Mason, Inc. |
| LPL Financial |
| Public Employees' Retirement System of Mississippi |
| New Jersey Division of Investment |
| Raymond James Financial, Inc. |
| South Carolina Retirement System Investment Commission |