"No matter who is elected, they will be forced to deal with the United States' excess-debt situation," says Jason Pride, the MIT-educated director of investment stratetgy (corrected) at the Pew-founded, Center City-based Glenmede Trust Co., which invests $21 billion.
The federal government owes too much and is spending a lot more than it's bringing in. If this keeps up, the economists tell us, the value of the dollar will fall, interest rates will rise, American consumers will get squeezed even more, the service economy as we know it will grind down, the slump could last for years.
What to do? You can choose, come November: "The (Obama) administration prefers to have a larger percentage of gross domestic product collected and spent by the government. Romney and Ryan prefer to limit the size of government," Pride says. It's a choice between "increasing taxes, or spending cuts."
So should we spend less -- on a budget that's one-quarter military, one-quarter Medicare and health payments, one-quarter Social Security retirement, and one quarter bridges, roads, education and law enforcement, food, drug, air and water protection, and everything else?
Or can we afford to tax more, now that federal tax rates are already the lowest since the 1970s? And should taxes bite all Americans, or should they be targeted to higher-paid people, angering business owners, professionals and heirs who say their personal spending and investment does more to stimulate hiring than Uncle Sam's?
The debate is way overdue, in an America that's been shoving its debt under the national rug for a generation or two. Today's gap between Democrats and Republicans "brings the fiscal deficit debate more to the front and center," says Pride. "People who didn't know how bad it is will get a glimpse" in the fall campaign. "They will respect it more and more."
Whoever wins, Congress will have one last chance to extend the Bush-era tax cuts and stave off spending cuts under current law. Otherwise tax rates will rise and spending cuts will take effect automatically Dec. 31 -- throwing the economy into recession next year, according to the Congressional Budget Office. "Which will make fo a nail-biter December," says Pride.
"Ultimately we're going to deal with this. It might not be the solution all of us want. It might not be some grand plan, a 10-year solution, a Simpson-Bowles plan, no. It may be more a situation of fits and starts. Every year, every 18 months, we'll pass a part of the solution. We won't take all the heat up front. We'll have extensions, and partial solutions."
But isn't that what we've been doing already? Doesn't that mean more uncertainty about taxes, making business reluctant to expand? "That's the strength of the Romney-Ryan argument: The more you take uncertainty out, the more you will get a lift in overall activity," said Pride.
So if investors think that's where we're headed, won't stock prices soar? "There is no empirical evidence as to how big a bump that would be," Pride told me. Not big, and not long, he expects: The likely staying power of a "sentimental" recovery based on mere election results "is very little."