Millionaire investors advocate a mixture of tax hikes, cuts to social programs and targeted increases in government spending to further improve the U.S. economic situation, according to a survey conducted this month by Millionaire Corner.
Though the economy has avoided dipping back into recession, its slow rate of growth is disappointing to both federal officials working to improve the economic situation and Americans hoping their personal finances will start looking up.
On the positive side, the private sector has added 2.5 million jobs since payrolls hit bottom in early 2010, said Janet L. Yellen, vice chair of the Federal Reserve, in a speech on Friday. U.S. exports have grown, industrial production has picked up, and business investment in equipment and software has increased in the last two years.
“Despite these improvements, the pace of the economic recovery has been less vigorous that any of us would have desired and than most forecasters had anticipated,” said Yellen at the annual meeting of the Financial Management Association International in Denver.
Improvements to the economic situation can be obtained by tax hikes for the wealthiest Americans, say the majority of Millionaire investors surveyed in October. More than 67 percent support raising taxes on individuals with more than $1 million in income – a tiny fraction of the U.S. population. Only 45 percent favor a tax hike that would hit closer to home – increases for individuals who make $250,000 a year.
More than 60 percent favor increased investment and research in renewable energy, such as solar energy, and alternative sources of fuel. An equal percentage favors infrastructure projects to create jobs while improving road, bridges and other public structures. More than 62 percent say that developing oil reserves in Alaska would improve the nation’s economic situation.
Fifty-five percent favor substantially cutting some social programs to reduce debt, and more than 52 percent favor restructuring Social Security benefits for Americans now under the age of 50. Herman Cain’s 9-9-9 tax plan, which would impose a flat 9 percent tax on personal income, corporate income and sales, received the support of 41 percent of the Millionaires surveyed.
Our October survey also reveals that Millionaires continue to feel the economic impact of the recession, though to a lesser extent than less affluent Americans. Nearly 32 percent have increased their savings because of the economic downturn, and almost 18 percent have had to dip into funds set aside for other purposes. More than 19 percent have paid down debt in response to the economic situation, and 5 percent of Millionaire households have a member who has returned to work either full-time or part-time.
The gross domestic product grew less than 1 percent in the first half of 2011, and economic productivity has not climbed back to pre-recession levels, said Yellen on Friday. Unemployment has dropped only 1 percentage point from its high of about 10 percent, while the number of private sector jobs remains more than 6 million below the peak reached in early 2008. Job growth is expected to remain anemic in the coming months, due to the reluctance of businesses to hire in the face of weak consumer demand.
Additional headwinds include shrinking government budgets that are constricting government spending and hiring, said Yellen. Slowing growth in foreign economies threaten U.S. exports, while continued weakness in the housing market puts a key drag on domestic growth.