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All right so as the US -- ever so close some taxing out its current line of credit latest idea from Senate Minority Leader Mitch McConnell.
To allow the president to raise the debt ceiling incrementally.
-- Maginnis is the president of the committee for a responsible federal budget -- should help us navigate through this next and hopefully final stage welcome back show -- so what do you think -- this latest idea by McConnell.
Well I'm afraid that we're now focusing more on how to kinda play the politics of the debt ceiling and less on how to get.
The big debt deal which.
Absolutely is what we need to have I mean the first rule of all this as we have to let that ceiling we should do -- as quickly as possible.
Chairman Bernanke is of course right that this could create a major crisis if we don't do this in a timely and responsible way.
But we think zionist -- off for weeks now sorry to -- you -- Getting nowhere I mean what kind of chuckling at this point -- we're still at an impasse.
Where's the compromise who's gonna came -- first what happens next and how can we get some progress here.
Well I think that two ways they compromised compromised by watering something down which -- I'm afraid of what we're gonna do we start saying okay.
We won't do taxes we won't -- entitlements will do a smaller deal.
In the end we get the debt ceiling increase that we got made -- no progress on the debt and that means that we are.
Facing all of these problems which would also face create -- crisis in this country which is a huge debt overhang.
The other way that you could actually brokered deal is you go bigger you find more spending cuts -- find more ways to reform the tax code.
And I know that's a heavy lift but it's such an important one politician should hold themselves to know lower standard I mean if this goes to pure politics.
We are so cynically.
Risking and making vulnerable the US economy because of -- political fight it's gonna go on either way OK so let's really chill down on the tax cut because we know Republicans -- -- line in the sand no tax hikes.
But -- with a reformed the tax -- what do you think makes the most sense that is most agreeable to both sides.
You know there's an incredible opportunity to afford the tax code because the tax code is just so bad he's such a bad starting point it's not hard to find ways to improve it.
The first place to look it's every year we have tax breaks which are in many cases spending.
Hidden through the tax code to the equivalent of over eight trillion dollars a year.
You can clean that up you can reduce those tax breaks for -- -- repeal them streamline them and get rid of ones that don't work save hundreds of billions of dollars.
And use that amount of money to lower tax rates so dramatically.
And I'm not a big believer you can't grow your way out of problem but you can grow the economy through important tax reform and by bringing rates down significantly you can grow the economy.
And generate new revenues that would help close the deficit that is a great model for tax reform that both -- should be able to buy -- -- you can make the tax code -- Simpler more efficient.
And raise more revenue for deficit reduction while keeping it the same progress as progressive as it is now.
That's win win win win when we really should be pursuing something like that.
So all these negotiations seem to be -- -- on DC and I think that a lot of people myself included.
As we talk about tax -- what should main street expect in terms of -- all the sorts out how will it affect my pocketbook.
Well we actually face a number of of risks right now the first risk is that we failed to lift the debt ceiling there would in all likelihood be an abrupt crisis where interest rates would spike up because creditors would lose faith in the US.
-- -- -- -- -- -- -- -- -- Ottawa yes more so that would -- that affects.
All of us who are -- whether or buying on our credit cards for houses for cars for new consumer durables.
Any of those things would be much much more expensive.
And then at the budget level of course -- that because it means the borrowing they are more expensive and all the services we get our lower and our taxes would go -- -- that affects us in many ways.
When asked about the president's comments -- Social Security checks are in jeopardy August 3.
What do you think about that and you know what's the story with the revenue run rate and how all the -- sorts out I mean is that really -- risk or is that just more politics.
Well and that the risk is that we don't know how you prioritize things once we hit the debt ceiling and suddenly we have to be making very tough decisions about how you prioritize our spending promises and to be clear these are -- -- regarding made.
First -- to -- interest on the debt that tell you avoid an actual default.
But that means that all other programs have to be determine what gets paid and how.
And certainly anything that's on the table to be paid there's no guarantee it will be so Social Security.
There is no guarantee that the checks will go out I do think politicians would prioritize that but we have no idea.
When if how they get paid and that -- the security that all of these programs are supposed to provide.
It's selling much more bottom up.
We should not get to that point you know we talk about entitlement reform and Social Security checks right now in jeopardy.
See this playing out for the next generation I mean do you think that Medicare Social Security we'll continue to exist and how confident are you.
In that considering all of this crisis talk right now we're experiencing.
At sunny day is taking to the -- turns out to lunch this week and I felt like I had to apologize to them because unless we fix this situation so many things are risk for them.
So we already know social security and Medicare.
Have to be changed and we have a choice we can make changes to them now that is -- gradual and thoughtful phased in over time don't affect current retirees.
And make sure that the programs are there and a strengthen form but a reasonable sustainable form for the next generation.
If we wait too long of course out we'll have to make much more abrupt changes and that will affect people who depend on those programs to really it want to should be protected.
But at the same time if we also don't fix those programs they squeeze out other government spending productive and government spending they push up tax increases.
And they leave the economy not a strong for the at the young interns I was talking to -- out there looking for jobs.
And so it has a profound effect there's actually no argument against reforming these entitlement Social Security Medicare Medicaid.
As quickly as possible the only reason to delay his political thing and sort of adamant saying here at the politics of this don't lead to -- policy must start to compromise.
-- -- -- appreciate your take on things thanks for joining us this hour.