JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, testifying to a U.S. Senate panel, said the government is risking an earlier-than-expected fiscal crisis as policy makers stay deadlocked on taxes and the budget.
“The one thing to keep in mind about the fiscal cliff is it may not wait until Dec. 31,” Dimon, 56, said today before the Senate Banking Committee, which called him to answer questions about a $2 billion trading loss. “Markets and businesses may start taking actions before that, that create a slowdown in the economy.”
A so-called fiscal cliff may be reached at year-end when tax-and-spending changes are scheduled to take effect unless Congress acts. Tax cuts enacted under then-President George W. Bush will expire as will a temporary reduction in the Social Security payroll tax. About $1 trillion in automatic spending cuts would begin, expanded jobless benefits will expire and the government will approach the legal limit on federal borrowing.
Dimon said lawmakers’ inability to reach an agreement on budget issues “helped cause a little downturn last year.” He urged approval of a compromise similar to the Simpson-Bowles plan, issued by President Barack Obama’s fiscal commission, which includes spending cuts and tax increases to balance the budget.
“It’d be better to do something now, so that we don’t create additional uncertainty among businesses and consumers,” Dimon said. “We have to get our fiscal act in order. I mean, it’s either going to be done to us or we’re going to do it ourselves.”
The plan named for the co-chairmen of Obama’s commission, former Senator Alan Simpson and Erskine Bowles, who was chief of staff under President Bill Clinton, has been rejected by the House. Obama hasn’t publicly endorsed the plan.