(Bloomberg) -- The “investor class” will have to pay for the ballooning debt stemming from the Covid-19 crisis, according to Jim Millstein, the co-chairman of Guggenheim Securities who led restructuring efforts at the U.S. Treasury Department after the financial crisis.
“There is one clear implication: The era of tax cuts is over,” Millstein said Monday in a Bloomberg Television interview. It’s “inevitable” that the wealthy will face greater taxes, he said. “People who have been fortune enough to be able to make significant incomes are going to have to make a greater contribution.”
Read more: U.S. Debt, Deficit Forecast to Hit Levels Not Seen Since WWII
The restructuring banker, whose firm is working with companies in the travel industry burned by the pandemic, said he’s concerned about businesses taking on more debt while still unable to generate revenue during the economic lockdown.
He said unprecedented support by the U.S. Federal Reserve to backstop credit markets has benefited investors in a way they’ll eventually have to pay back.
“That kind of support for the investor class is ultimately something the investor class is ultimately going to have to pay for,” Millstein said. “If we’re really creating a backstop against credit losses then, you know, eventually, if this government is doing that much for that class, then that class is going to have to start paying for it.”
He said support for personal income is the best method of intervention, through direct payments to individuals.
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