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Bruce Josten of the U.S. Chamber of Commerce argues if the government doesn’t extend tax cuts, the effects could be devastating to the economy.
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Markets now talking about this fiscal cliff if congress doesn't come debt some sort of an agreement and take some sort of action on taxes by the end of the year the impact on the US economy.
Could be devastating that's the argument our next guest is -- presenting and did so -- an open letter to congress first Johnston.
Vice president for government affairs at the US chamber of commerce joins us right now and I'll start off with the discussion we're actually having earlier this hour of our market.
Related -- Phil Orlando Saddam he's pretty optimistic about the market -- that this fiscal cliff stuff you must if you're optimistic you must think it's.
It you know there's not much to it or that obviously there would be.
But a lot of people are betting that at the ended it ended the day as they always do congress will either do something or -- and push this and kick the can down the road and it's -- it's gonna be a non issue is that not true.
Well are gonna have to do something -- Or it could be a non issue and I would agree I -- congress has got itself kind of in a box on this one.
And they -- -- alternative they've got in the near term meeting in the lame duck session.
Is to basically make an extension.
The the spending items and the tax cuts that will expire in the tax Extenders that are expire.
Otherwise we're gonna have about a 600 plus billion dollar fiscal drag right it -- very still sputtering -- Economy it's huge because and that's my argument is like to -- really wanna spend the whole summer saying -- what happened what if they don't do this because.
-- it is just almost incomprehensible.
That they would allow because this would almost definitely if these spending cuts tax increases went into effect.
Almost definitely pushes back into recession right -- -- you've lost a -- -- economics.
-- absolutely in fact the Congressional Budget Office the official score keeper for congress at the end of May Day.
Said yes that that the size of this fiscal drag could be enough to push the economy right back into recession.
Mark Zandi from Moody's analytics is an outside advisor to the administration on economic policy Bryant has said it can reduce GDP growth next year by three and a half percent and that's yet portals like India pay a likely outcome in your view you know the politics behind -- what do you think -- I think the only likely outcome that makes any sense for members of both parties.
Is to make a one year extension minimally.
The 01 another three tax rates are some of the Extenders such as the AMT in the estate and gift tax.
And just push him off for a year but it's important with in doing that.
That they -- just do that because this -- got to be a two step process.
With mandatory spending that is specifically entitlements.
Consuming 57 cents of every dollar valley by our federal government today.
With 77 million baby boomers now beginning to retire this year -- declare -- an average of 101000 today.
They have got to fundamentally tackle both tax reform and entitlement.
And I think somebody's already done that and I always wonder I know it's DC and -- a lot.
They don't exist says it's politics but why and what's the Chamber's view on on Simpson -- -- not just adopt that it's pretty much out there and say hey that's our long term solution let's get it done and even if we do a short term one year.
Long term what's figure this sensible thing out.
-- -- But directionally I thank you can say Simpson balls got it right the challenge have a sense of Moses is not a lot of details to report by two people Simpson involves.
It basically cost there need to tackle entitlement reform if you're not gonna do that were not being serious as a country to be frank.
It talks about the need to undertake fundamental tax reform.
What some of us did -- with respect to send some balls as it also basically cause for around a trillion dollar tax increase.
Which in our view is not the right economic policy for the country right now.
So direction only that needs to be worked out what we don't want.
Is what congress did last year after the budget control act they formed a super committee gave it unlimited powers to tackle all of these issues.
And it did it fail.
Now so now we have this approaching cleft.
We can't drive the American academy off the -- we've had reports were GDP's been revised downwards.
We've seen unemployment spiked up right we're looking at Europe our largest trading partner and there -- worse -- sputtering.
And nobody can predict what's gonna happen there level on the Middle East so Smart policy is first do no -- here.
Which means extend everything -- for a year with a commitment to tackle what needs to be done by the congress of the United States and the administration first Johnston at the at the chamber.
