Robert Reynolds, CEO of Putnam Investments, outlined in comments at the National Press Club in Washington on Wednesday, a series of reforms called “The New Solvency,” which he said would help stimulate job growth, shore up Social Security, and help reduce the federal budget deficit.
A long-time advocate for retirement and Social Security reform, Reynolds (left) commented that the current lame-duck session in Congress will be “very active,” and said the New Solvency should be grounded in higher savings and investment, sustainable growth, new business formation, job creation and fiscal sustainability.
If the U.S. does not move on it’s own to a new economic model, “global markets will force an adjustment,” Reynolds warned, “first gradually, then suddenly.” And, he continued, the global markets will force change “in ways much more painful than anything the Fiscal Responsibility Commission proposed last week. If we don’t act, we will, in effect, set our course toward another financial crisis that may well make the crash of 2008 seem like the good old days.”
Reynolds delivered his comments on the same day that the Bipartisan Policy Center, co-chaired by former Senate Budget Committee Chairman Pete Domenici and former White House budget director Alice Rivlin, unveiled their plan for fixing the deficit.
Even though “the massive stimulus spending we’ve done helped to avoid another Great Depression,” Reynolds said, “the Obama Administration’s own budget forecasts show national debt on track toward more than 90% of GDP by 2020, with no end in sight.” The nation’s national debt, he continued, “is growing by about $2 million a minute.” The United States, he said, “is at a historic inflection point—between decline and renewal—and the whole world is watching us.”
In outlining his definition of the New Solvency, Reynolds said it doesn’t mean “slamming on the brakes and aiming for a balanced budget overnight, or trying to pay off the whole national debt.” Rather, the New Solvency means “moving our country onto a path that has our national economy, personal incomes and government revenues all growing faster than any debts we owe, and on a sustainable basis.”