Wilbur Ross: Beware an Obama Victory, Businesses Will Suffer

Tuesday, 06 Nov 2012 10:58 AM

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Businesses should beware a re-election of President Barack Obama, as his second-term policies would generate widespread uncertainty, said venture capitalist Wilbur Ross, chairman and CEO of WL Ross and Co.

Uncertainty tends to nudge business owners away from ramping up new projects and hiring, which dampens an already tepid recovery.

"There’s an old saying: business can deal with good news, business can deal with bad news — pretty hard for business to deal with uncertainty,” Ross told CNBC.

Editor's Note: Obama Donor Banned This Video But You Can Watch it Here

"And right now, particularly if you had an Obama re-election, the uncertainties are not only the fiscal cliff, which is big enough, but also uncertainties over what the tax rate will be and how bad the regulatory environment will become."

At the end of this year, the Bush-era tax cuts and other tax breaks are scheduled to expire right at the same time automatic cuts to government spending deal are poised to kick in, a combination known as a fiscal cliff that could send the country into recession next year.

The nonpartisan Congressional Budget Office has estimated that failure to address the cliff could contract the economy by 0.5 percent next year,

Add to that, the president's Patient Protection and Affordable Care Act, better known as Obamacare, harbors tax hikes of its own that take aim at investment income.

Meanwhile, Obama has proposed hiking taxes on the wealthy, while Republican presidential candidate Mitt Romney has said he'll cut taxes across the board for everyone but eliminate loopholes.

Since nobody would know what they will be paying in taxes with an Obama victory, businesses will remain on the sidelines, while hiring would remain at bay, especially with a fast approaching fiscal cliff.

"There’s no question that capital investment by businesses has been held back," Ross told the network.

"So there will be frankly a lot of ongoing concerns that businesses will have in the event of an Obama re-election,” he added.

Investors worldwide are tracking U.S. elections and will continue to monitor the country's efforts to avoid the fiscal cliff.

“The U.S. has been in denial for a couple of years now,” said Azad Zangana, a European economist at Schroders Investment Management, according to Bloomberg.

“They have in fact been increasing stimulus into their economy not actually tightening fiscal policy, which of course will bring us to the fiscal cliff.”

Editor's Note:
Obama Donor Banned This Video But You Can Watch it Here


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