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Former Council of Economic Advisors Chairman Martin Baily explains why he would extend the payroll tax holiday.
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-- -- Their payroll tax colleges mentioned at the pay -- tax -- or the fight to extend this tax cut.
Shift to Republicans in the house after the senate rejected proposals offered by both parties yesterday.
Will we see a deal get done joining us is the former chairman of the council of economic advisors under President Clinton.
Martin Bailey -- David Stockman says we can't afford this holiday we use that.
Well.
I think we should take this holiday and as long as it's not that -- -- holiday.
I think we can afford -- fairly short holiday the economy is still pretty weak but it is beginning just shows signs of growth.
So I think -- be a mistake to hit with a higher taxes in in the short run so I would extend that the payroll tax holiday.
But if it could be done what about the same time has heading -- a real ten year plan intent to close the budget deficit.
Then it would be even more effective and of course we see in the the failure of the super committee.
I don't know if we're gonna make progress on the -- that's an issue until after the election but that's what we should do.
Is to continue to stimulate the economy now but so be prepared to have -- good package over the ten.
-- period it -- again again the problem of the word temporary.
When you're talking to a lawmaker.
And even -- even on senator Bernie Sanders said this he's against extending the payroll tax cut.
Because if you have not one year but two years of this it is harder today and break the habit and take it away and I think -- why isn't that an issue.
Well it is an issue.
I mean we had its we have the bush tax cuts which would to date we couldn't afford -- mine waste.
From now suffered from a budget consequences of those -- for many years.
And it's been very very hard to take those back then and Republicans.
Not wanting to take any of those tax cuts back and in fact even.
Obama doesn't want to take most of them.
Back so we've ended up with them on sustainable level of taxation.
That eventually gonna have -- Excuse me eventually would have to change.
Here's the insanity of the payroll tax cut even though I mean I've advocated.
On some time ago.
They used to -- -- security because of the tax -- they use general revenue.
Our deficit spending borrowing the money.
But -- security actually lends money to the federal government by investing in treasuries.
This is this circular bizarre O world that only seems to make cents down in Washington.
Well it is it is.
He -- I wouldn't defend necessarily the the accounting.
But that -- it it.
In the end you have to look at what the overall fiscal stance of the government is and getting that back on track so exactly shuffling me at the accounts from one best place to another area isn't the most important thing the most important thing.
Is we get our fiscal situation on track at the right time we don't do it precipitously.
I mean I think in Europe they've got have to address the austerity measures because they have no choice.
But we've seen what happens if you try to do that too quickly you end up with a recession.
The last thing we want here is to go back into a second recession by trying to do fiscal austerity too quickly.
-- it was great to talk to you thank you so much for trying to make sense of you -- are a world that -- -- and I was very strange it is strange.
