By Jill Cowan
6:57 PM PDT, October 20, 2012
The upcoming election and federal tax reforms were hot topics Friday morning at the Newport Beach Chamber of Commerce's Economic Forecast for 2013 breakfast.
"This is very topical — the connection between politics and the economy," said Casey Griffin, event organizer and chamber board member.
Event attendance nearly tripled since the chamber's first forecast last year, Griffin said.
About 350 people from around the area turned out for the early seminar at the Fashion Island Newport Beach Marriott.
Rep. John Campbell (R-Irvine), animated even as audience members sipped coffee to wake up, spoke first.
"I feel a bit like Lady Gaga," he joked, adjusting his microphone earpiece.
His message for business leaders, however, was less bright.
"You have absolutely no idea what your tax rates are going to be in January," he said, adding that that uncertainty and higher taxes stifle risk taking in business.
As the U.S. budget hurtles toward a "fiscal cliff," he said, budgetary fixes will require bipartisan cooperation.
"[The Republican majority House of Representatives has] been trying all year," he said. "Let's just extend the fiscal cliff and work on an entirely new tax code." If President Obama is reelected, he said, budget negotiations may again reach a stalemate.
Obama, he said, was largely responsible for escalating partisan ill-will by passing the Patient Protection and Affordable Care Act without any Republican votes in the Senate, a move he said was "a political mistake."
In the upcoming election, Campbell said, "neither side is going to get 60 votes in the Senate," but "I don't think a President [Mitt] Romney will make that mistake."
Andrew Policano, dean of UC Irvine's Paul Merage School of Business, addressed some of the complex global forces affecting the national economy, while drawing a few laughs.
He used a complex flow chart to illustrate how fiscal policy is implemented, and to illustrate monetary policy implementation, up popped a picture of Federal Reserve Board Chairman Ben Bernanke.
"Doesn't that [essentially one-man system] seem strange to you?" he said. "But thank God we have it."
Policano also addressed what he said is the deeply troubled Social Security system. He said without action, Social Security could be exhausted by 2033. Still with slow, measured adjustments in the form of tax increases and decreases in benefits, it doesn't have to be all doom and gloom, he said.
As a possible solution for the country's financial woes, Policano posited that too many people believe a four-year degree is the only option. Instead, he suggested, certain areas where costs of living are low could be transformed into manufacturing centers with new work for highly skilled workers.
"Make Detroit our China," he said.
Anfield Capital Management Chief Executive David Young rounded out the morning's speakers, bringing a more advice-oriented perspective to the stage.
Young, who has also worked for Newport financial giant PIMCO, advised investors to take hyperbole with a grain of salt.
"You've either got to take some risks or lower your expectations," he said.
Young said long-maturity bonds — especially municipal bonds — are risky, unless you plan to hang onto them until maturity.
The housing market, on the other hand, may be worth taking another look at.
"We're using a word we have not used to talk about the housing market in five years," he said. "Investment."