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Stanford University Professor John Taylor on the steps to reducing the government’s debt and boosting the economy’s outlook.
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Hello everybody I'm -- well let's well it may be the dog days of summer but there are lots of economic warnings out -- for anybody paying attention.
Is our economy about to tip back into recession.
Joining me now John Taylor Stanford University professor of economics and Hoover institution senior fellow John always great to see you thanks for coming back on the show.
Just this week the Congressional Budget Office said that recession is like late.
If the automatic tax increases scheduled to go into effect at the beginning of next year happen you said recession is a big threat to the economy right now.
What your latest thoughts.
-- growth is already quite low right we're coming into this last quarter just one and a half percent won't be too much better in the current quarter seniority very low.
Plus if there is a big tax increase is no question that's that's a hit to the economy were open that's not gonna happen.
Hope we get over this fiscal -- but it remains to be seen.
Well I I guess the devil's in the of course is we're showing right now -- that the screen.
We're gonna hit 161000 dollars in federal debt shortly this weekend.
That plays -- role as well correct.
Correct what what needs to be done is to put in a policy -- reduces spending gradually.
I'd guess that debt down keeps it from growing so rapidly.
Make -- we're not -- increase taxes make that clear to people and I think put in a good tax reform that.
We'll spur economic growth it's really not that hard to see what needs to be done the question is whether.
We can do it politically.
Well I -- today on the campaign trail had this to say about his economic plan.
I'm not looking as I know the Obama people want to say to reduce taxes for wealthy people I'm looking instead the lower tax rates.
And limit deductions and exemptions in such a way that we haven't enterprises small business is able to keep more their capital.
And at the same time simplify the code.
John you're part of that -- kitchen cabinet the advisors economic advisors.
Giving him advice on how to handle the economy I dizzy have a right here.
Absolutely.
What what -- economy back and concerns about tax increases if you can put in place a policy that.
Rules that out and actually reduces -- tax rates and expands the base so that encourages firms to hire.
Take some of that cash it's -- on their books and put to good use it encourages the things that we -- and that's more economic growth.
So the economics are pretty clear and I think the -- laid this out -- it very simple on its people -- understand that -- that's why we need to move ahead with this kind of a program.
There -- lots of questions out there about whether Romney is really being clear about this plan with a people really understand what he's promoting here.
And the present course calling his plan Romney who led.
Because it's Robin Hood in reverse he says that folks are in the middle class -- gonna end up paying for tax cuts for the wealthy do you agree.
No I don't think that's -- the case at all it's basically made up by somebody else's.
Calculations HI make some assumptions that that's the case but that's not part of the plan the plan is to reduce.
Marginal tax rates reduce tax rates if you like across the board 20% across the board.
And that will help everyone most important though it's going to be necessary to do this to increase economic growth which have been so low.
The last few years and what's why unemployment is so high especially long term unemployment -- it's the right thing to do to get unemployment down.
And what we've been doing recently has not been working.
I pew research this week had -- -- an amazing study really on the middle class talking about.
Not only in comes but also net worth and what really stunned me.
The middle class losing 25%.
I'm sorry 28% of its net worth over the last decade.
I don't feel like either candidate is really now talking about.
What to do to help the middle class which should dead they be talking about and and what -- your what do you think -- is going to attack next on this topic.
But of course governor Romney is way describes this sort of reform plan to -- reduced.
The debt to do -- -- -- regulations to get economic growth going is to help the middle class the unemployment rate.
Affects the little class.
Lack of job opportunities effects of middle class.
They basic.
Lack of economic growth effects of little class so all those things -- you can do to get a faster growth rate like we've had in past expansions like we had in the 1980s.
That's the way to help the middle class -- -- little class in the past and it will help.
Again.
-- John Taylor thanks for coming on tonight appreciate your time come back any time.
Thank you are.
