Aflac Chairman and Chief Executive Officer Dan Amos, during a trip to Boston, weighed in Tuesday on the precarious “fiscal cliff” hanging over the nation, essentially calling it a time bomb poised to wreak destruction.
“You’re dealing with dynamite. You can hold it in your hand and it won’t explode on you, but at some point it can. So I’m very worried,” Amos said in a Bloomberg report, his comments coming after an appearance at the Boston College Chief Executives’ Club.
The Obama Administration and U.S. lawmakers — with Republicans and Democrats at odds — are working to negotiate a long-term financial strategy for the U.S. and its soaring budget deficit. Painful automatic federal spending cuts are among the possibilities, with most experts projecting that failure to reach a compromise will throw the U.S. back into recession.
“I’m afraid they’re going to go to the last moment, but I would certainly like to see it resolved and hope it will be,” Amos told Bloomberg. “I think everyone realizes how important this is to our economy.”
The potential financial calamity also prompted another Columbus-based company, TSYS, to make a pre-emptive move Tuesday that it says could benefit those who have invested in shares of its stock.
The global credit-card processor said it is moving payment of its next quarterly dividend from January to this month, a change approved by its board of directors. The cash dividend is 10 cents per share of TSYS common stock, which is payable Dec. 26 to those who own shares by Dec. 17.
“The company accelerated its fourth quarter dividend, typically paid in January, to allow shareholders to benefit from the lower dividend tax rate that is set to expire Dec. 31, 2012,” the firm said in a short news release. Company executives were not available for comment, said TSYS spokesman Cyle Mims.
TSYS joins a rising number of companies doing the same thing, however. Costco, Whole Foods, Dish Network, Cato, American Eagle Outfitters, Sonic, Coach and HCA Holdings are just a few rushing out their dividends.
The premise is that any federal budget deal will likely bring increased tax rates in some form for corporate taxpayers and investors, along with cuts in entitlement programs for individuals. An increase in the dividend tax rate, as well as some sort of adjustment or cap on home mortgage deductions, are among the possibilities being discussed in Washington, D.C.
In Monday’s 2013 Economic Outlook presentation, Robert Sumichrast, dean of the University of Georgia’s Terry College of Business, expressed optimism that budget negotiators will at least come up with a short-term solution — “kicking the can down the road” — to buy more time for a permanent fix. But, he said, there’s no doubt whatsoever something has to be done to get revenue in line with spending.
“I think there’s no question that revenues must increase, either by effective rates going up because of closing loopholes or capping deductions, or by increasing tax rates on some or more people. But one way or another there has to be more revenue,” said Sumichrast before turning to non-discretionary programs that are eating up so much of the U.S. budget.
“If you just look at the growth in Medicaid and Medicare and to some extent, Social Security, we can’t tax ourselves enough to pay for the projected growth rates in those programs over the long term,” he said. “So there must be reform there.”