Wall Street Nonchalant on Budget Deal; Administration's Dire Predictions Discounted
Wall Street analysts today shrugged off Clinton administration predictions that financial markets will swoon if the president's budget is defeated. They said the package was too riddled with taxes and compromises for investors to care much if it lives or dies.</br></br>A defeat of the measure would be unexpected, Wall Street executives said, and would send the bond market down and might sour stocks temporarily. But they said the impact would be relatively mild and probably lead to expectations of a better budget bill later in the summer.</br></br>"There would be some effect, but I'm not sure that it would be major or lasting," said Marshall Acuff, the portfolio strategist at Smith Barney Shearson.</br></br>Some Washington officials have warned that if Congress backs away from the plan, which is supposed to cut the federal deficit by $500 billion over five years, the financial markets will be shaken. Treasury Secretary Lloyd Bentsen, for example, said Federal Reserve Chairman Alan Greenspan was "right on target" in predicting a negative market reaction in such a case.</br></br>"I think you'd see an immediate up-spike in interest rates and with that you normally correlate a drop in the stock market," Bentsen said.