By Peter Schroeder - 10/10/12 06:26 PM EDT
JPMorgan Chase Chief Executive Jamie Dimon on Wednesday accused Washington of completely mishandling the looming fiscal cliff — and said he'd be happy to pay higher taxes to avoid an economic crisis.
The head of the nation's largest bank said he is "barely" still a Democrat. But he threw his support behind Democrats in saying he would be fine paying more taxes to help resolve the economic threat to the country.
President Obama wants to let Bush-era tax rates expire for higher-income earners and impose a minimum tax rate on people making more than $1 million a year.
Dimon added that he would not oppose higher taxes on capital gains, an idea that has also been pushed by Democrats.
However, Dimon also called for a broad overhaul of the corporate tax code, calling it broken.
Dimon said that the fiscal cliff — the combination of automatic spending cuts and expiring tax cuts set to occur in January — is not quite as dire a threat as the debt-ceiling battle of last August. But he said it is still hugely irresponsible that Washington has not reached a deal to solve the problem.
The uncertainty driven by the political standoff over how to adjust the policy is beginning to push businesses to the sideline, and will only get worse as time passes, Dimon warned.
"It's going to happen now and right after the election," he said. "Don't hire, don't build, don't buy. Wait and see ... well, that is a recession, and let's not do that to ourselves."
The outspoken banker backed the Simpson-Bowles deficit plan, saying the fiscal improvements it would provide could ignite the U.S. economy.
"I believe, had that been done a year ago or whatever, this economy would be booming. Booming," he said.
If the U.S. does not improve its fiscal course, Dimon said it is a matter of when — not if — the market begins to punish American borrowing.
But the most immediate threat to the U.S. economy, which is still on tenuous ground, is the fiscal cliff, he said.
It is "virtually assured" that investors will begin demanding rapidly increasing rates in exchange for Treasury bonds at some point if the nation remains on its current fiscal path, Dimon said.
"It will happen. It is a matter of time. The United States can't borrow indefinitely," he warned. "We are going to have fiscal discipline. It is going to be imposed upon us, or we do the right thing and we do it to ourselves."