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Former Reagan Economic Advisor Art Laffer argues that the current unemployment rate can’t become the norm.
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Knows this week reporting the unemployment rate to the smell test last week's unemployment numbers.
Show the economy only added 80000 jobs in June the unemployment rate -- stability point 2%.
Democrats like White House spokesman Jay Carney and congresswoman Debbie Wasserman Schultz -- those numbers aren't too bad.
So -- eight point 2% the new normal is this what we're going to deal with in the future.
Joining me now former economic policy advisor for President Reagan founder of Laffer associates art Laffer.
I've heard this from a lot of I've -- laden -- taken on too but there's a lot of economists out there right now they're gobble okay with these numbers are you.
I don't -- -- of course not I think it's outrageous these numbers aren't even enough to keep track with population growth.
Tom I mean if you look at what's happened to the participation rate that's the number of people who consider themselves part of -- labor force.
That participation rate under Obama -- drop from a little but over 66%.
Down to a little bit below 64%.
If you whether those people in who've left the labor force you've got an unemployment rate right now a little over 12%.
This is on -- -- this is just the worst economic period I've seen in my life and I lived through Jimmy Carter.
Yeah well they have today that they have to explain -- somehow -- -- that's why they're going to you know this is I'm I'm okay with -- I mean Austin Goolsbee said I'm okay with an.
Why but why he knows better than the -- wants to -- well and it you know as a professor and all of that is a pretty good economist he knows that's not true.
I don't know why would ever say something like that I mean -- this -- amount of payment I ever would have been paid by Reagan to say something like that.
What if Reagan they had these types of numbers that would have been outrageous that the -- I I just don't understand why a guy like that would say -- His reputation is worth far more than that type of not comment.
I would think so but does so you've got like you've got this -- three.
Which is the unemployment rate the headline the eight point 2% that you got the use sic yeah which is.
The people that are are looking or may be haven't looked -- recently discouraged and that's like you said it got tired number.
Then you've got this other number that I wanted to ask you about it's the it's consulting termed a shadow government statistics.
They go out there and they say what we're not doing is keeping track of the long term unemployed.
-- well -- further their desperation that that number is somewhere 22%.
You agree.
Well -- I don't know about that number and how they -- -- I I don't wanna say it's right or wrong because I don't know it.
But what I can tell you Thomas that the.
Average duration of unemployment for people who were on -- ploy today.
Is a little bit less than forty weeks so.
If you find an unemployed person his average time being unemployed has been a -- a less than forty weeks that's twice as high.
As the next highest number in history going back to 1948.
Twice as high.
You know you've got a very very bad economy now and it doesn't look like it's gonna get -- better anytime soon.
We bring up.
I always feel like you're going to school with you art community -- Hollywood teach you speak to be something -- -- that Itar.
This.
-- That the way I read -- was that which is the opposite of supply side.
He -- he was.
I think his his numbers have been misused -- he apparently said look at if you're going to do this.
Priming the pump with government money it's gotta be temporary it's gotta be targeted.
And yet to pay down the deficit.
So.
People say that Obama is a keynesian I'm not so sure that's right what do you say.
Now I think you're right -- would never tolerated anything like what's going on today.
I mean in fact from -- it described a conversation -- Wary told key is how these.
His policies and his prescriptions are being described these that.
Don't worry Friedrich.
In the next couple weeks -- go to my followers to make sure they stop doing this nonsense.
And of course as you know -- died the next week so.
He'd ever -- get to go back and correct the people who -- of his followers so I don't think Keynes would have.
Agree -- much that he's doing now especially not raising tax rates on the rich.
I mean -- was the best describe her of the Laffer Curve I've ever seen especially in a high income workers so.
There he -- go.
How to how to how to he -- he described the Laffer Curve.
Oh exactly think you can raise taxes so much that it's like a businessman who raised the price of this product.
And he loses so much and sales that is losses double and finally only balances is book.
When he's raised the price so much that there's no revenue and he's having only lots with.
It would be foolish to do something like that it's just not common sense.
And that was McCain's -- I don't have a whole quote here for you but I can get it it's just wonderful quote on the Laffer Curve.
I gotta go find that sounds as -- -- -- but the part or all of makes right reality I would love -- the part that you've always talked about his his business about government spending.
And the fact that for every time that they spend body in a lot of people -- -- the government's got to spend money because nobody else has -- disband.
But that money comes out of a productive person's pocket.
How do we deliver that message out.
I don't know I've been trying to get enough for years and years it's like trying to -- teach people how to do double entry bookkeeping.
You know you have a debit and you have a credit.
Whenever you increased one thing you've got -- lower something else.
And you know if the government spends the money they've guide their got to raise taxes or run a deficit borrow the money from the people who no longer -- -- to spend.
It's as simple as that for every credit there's a debit and that's the way the world runs but.
These people think you have single entry accounting systems.
-- the government can spend with no one -- the resources it's ridiculous.
Which your take -- and -- -- -- doesn't -- It doesn't conform to the numbers either via amid the biggest increases in deficit spending were the biggest clients our economy collapsed.
And if you look at a cross section time series of of the OECD countries.
The relationship is exactly the opposite they say it would be those -- with the biggest stimulus spending had the biggest declines and output growth.
And those countries the little least stimulus spending had the least decline in output growth that's -- it's very clear.
The head winds are coming and we talked before about -- the fiscal cliff coming on January 1.
I don't have a lot of hope that congress is gonna do anything other than fifty can I don't ignore the very best but.
You know you've also got Europe.
That's that's in a recession you know got and we have a global slowdown coming.
I think we do I mean if you look at Britain they are innocent double dip recession.
As you know Cameron.
Two years ago raise the highest marginal income tax rate in Britain from 40% to 50% Tom.
And as you know the economy went into a double dip recession two -- negative growth.
-- they didn't get the money I mean they were expecting to and have billion dollars in tax revenues from these people they got less than zero.
Revenues went down -- that doesn't count.
All the additional people that these people property tax they pay payroll taxes I mean these are the people who determine jobs output employment in the economy.
They just don't stop.
Always fascinated -- art Laffer thank you so much for being with us always my pleasure Todd thank you for very much for asking me -- -- it.
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