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Former Council of Economic Advisors chairman Dr. Martin Baily explains how spending cuts will impact the economy.
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-- -- -- in Washington Martin Bailey is here former chairman of the council of economic advisors under President Clinton.
Now with the Brookings Institution mart always great to see it this is focused just -- reading this spending cuts.
If you well what do you think the impact will be on the economy if let's assume the tax cut tax -- to get extended.
Just the spending cuts puts them -- Well the trouble as we have such a week.
Recovery if we had a more robust recovery as we did have a non ninety's when you made spending cuts -- that it helped us to get to a balanced budget.
Right now with the economy so weak if you take money out of that economy whether it's spending more or tax increases.
That's going to slow things down.
So what we need to do honestly in the long run over the next few years is to both cut spending I think raise revenues raise tax revenues both stick to balance the budget but in the short run.
This is not good Madison and -- -- seeing that -- both here and in in Europe of course even more do you.
Think though the net debt is spending cuts don't happen and and I said this to -- when I was -- -- up.
What are they spending cuts gonna happen because you can always make an excuse to kicked him down the road and continued it is so.
You.
You can and I would probably kick him down around until that the economy was a little bit more.
Robust.
I -- that there is situation where the Republicans don't want the defense.
Cuts and of course Leon Panetta doesn't want to defense cuts either.
They want cuts in and other places so it's gotta be a bargaining.
Agreement worked out between the president -- and congress to try to figure out.
If these cuts are gonna take place -- got to deal with this.
Rescission.
Which could be quite damaging to the eight to the economy.
This what this is already a what is gonna happen at the ended the year with this sequester with a mandatory spending cuts.
And all of the bush tax cuts coming up for expiration it would RDB.
And on carving time but you throw in the fact that this is a presidential election year.
And I just wonder what the impact will be on the psyche of Americans on.
Business confidence going into the end of the year and the -- I think as you might put it electioneering of at all.
Well I had -- of assumed that nothing much is gonna get -- until.
After the election memory we're gonna have a mad scramble either to postpone some of these things or -- hopefully deal with them.
You know -- -- have to be done before January.
So.
But but.
Some of them are putting pressure on the economy now as you you've noted in your report send an agency's.
It's it's figuring well if -- gonna have to cut we've got to prepare for it now -- -- figure out.
They don't wanna stop programs that they and they can't fund through because that this requests are meant to say it's a question -- precision.
So because of the sequester.
So it is beginning intent to have some urgency now.
You know and in in right.
-- that would mean that both sides would get together and figure out how to do it now.
Whether that can happen in the overheated.
-- pre election situation I think is so out of anybody's guess I hope so.
Well keep open.
-- -- -- -- was great to see you as always Barton -- like with the Brookings institute -- you you have thank you have a great weekend not a lack.
