Salient to Investors:

A Bloomberg Government study says $4 trillion of spending cuts and tax increases over 10 years envisioned by Democrats and Republicans would be inadequate as a long-term fix – $6 trillion in deficit reduction will be needed in the next decade as a minimum down payment for a sounder fiscal footing. $9 trillion would be needed to ensure long-run fiscal soundness due to an aging population and rising health-care costs.

Mike Englund at Action Economics said a $4 trillion deal changes the 5-alarm financial fire to a 3-alarm fire, and eventual U.S. insolvency – a $6 trillion deal returns us to the pre-Obama financial situation, which was manageable and with no ratings implications.

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