J.P. Morgan Asset Management on Thursday held a conference call with its clients discussing the impact of the fiscal cliff and President Obama’s re-election on retirement.
On the call were Lynn Dudley, senior vice president for American Benefits Council and Bob Holcomb, executive director of legislative and industry affairs for J.P. Morgan Retirement Plan Services. Michael Falcon, head of retirement for J.P Morgan, acted as moderator.
Following the election, we’re left with a “status quo” in the House and Senate, Dudley said. “For all the money that was spent, the House and the Senate look the same on the outside, but not so much on the inside. The election changed the makeup from a religious, race and gender perspective.”
Rep. Mazie Hirono currently represents Hawaii in the House, but will be the Senate’s first Buddhist when she is sworn in. She is also the first Asian-American woman to be elected to the Senate. Furthermore, her replacement in the House, Tulsi Gabbard, will be the first Hindu to serve in Congress.
The change in the demographics of Congress is important because it “can change the way dialogue is conducted and change the shape of coalitions that are formed,” Dudley said.
Holcomb said the results of the election left him feeling optimistic. “It seems more policymakers have come to the realization that now is the time to roll up their sleeves and find good policies and solutions,” he said. “I’m cautiously optimistic going into 2013.”
In the lame duck session before the new Congress takes over in January, Holcomb sees one of three scenarios playing out regarding the fiscal cliff. One, and least likely, he said, was that policymakers would reach a bargain and “march boldly into 2013.” Another possibility was for short-term extensions based on a downvpayment or caps on deductions. The most likely scenario, he said, was that “we’ll go into the end December without anything happening and the new Congress will address issues retroactively.
Dudley said that conciliatory efforts were most effective in the post-election period. “A lot of the public doesn’t fully understand” the problems at hand, she said, and neither do a lot of members of Congress. “Congressional leaders know we have to do something.”
Regarding tax reform, Holcomb said that policymakers appear to have strong positions “on the surface,” but that “we’re also hearing underlying language that shows they’re willing to look at tax rates that are lower than those under Clinton or alternative ways of raising income.”