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Former CBO Director Douglas Holtz-Eakin on the potential impact of the fiscal cliff and Republican calls to go back to the gold standard.
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She is disappointed that President Obama -- and focus on what lies ahead for the economy of the so called fiscal cliff is and avoided.
And he says the Republican platform decision to start of the gold standard is a tribute to discontent with the Federal Reserve.
Joining us now former Congressional Budget Office director Douglas Holtz Aiken is the president of the American action form.
-- good to have you with us we appreciate it.
The CBO study showing very -- Enormous repercussions.
That will occur -- if the -- report is -- avoided by this administration and this congress.
He has not said a word about it or are you -- why would he not.
Now I'm not surprised -- and said disappointed and on the does carrier risk for him I mean he has made.
The centerpiece of his reelection energize his base by promising to tax rich people among other things -- That's not going to avoid a fiscal -- that's actually gonna drive us over.
Mom senator Patty Murray -- even said we should go over the fiscal cliff just to teach Republicans that they have to raise taxes.
The trouble -- that is it's irresponsible economic management the fiscal cliff is.
4% of GD -- and the CBO's study I think is a generous and in in what its implications it could be even worse so.
I think the risk for the president is it's starting to affect the economy now it will affect becoming more as we approach it.
And for president needs better economic conditions to get reelected that's a dangerous move.
And certainly these markets are going to be your responses.
They're going to be it seems today and I want to that your thinking on it.
It seems to me they're going to be making judgments in the weeks ahead but well before the election minister who will be president -- here.
And they're going to be making judgments about what the the policy will be.
On those -- bush tax costs were there they will continue permanently.
On the automatic.
Budget cuts as a result of sequestration.
This is not so they can wait till the election -- lame duck section is that.
It's better not to us wait until that I mean that the house Republicans have actually already taking care of these problems they have.
Extended -- of the current tax rates for one year and passed along with that fast track legislation for tax reform in 2013.
They've also replaced the sequester the across the board cuts with targeted cuts of the take place over a longer term and actually hit -- The parts of the budget that need more more attention so.
There's one group that's -- there's nothing going on in the senate the president silent and the implication.
Is that somehow you can just pick this up after the election but.
I don't think so if you were.
An equity investor -- you even think it's possible that your dividend action -- from fifteen nearly 45%.
You're gonna start moving your portfolio -- its -- the only common sense so I worry about the the implications for an economist during way to slow it already.
The Republicans.
Advancing the gold standard.
At the convention.
Who would've fought and many -- -- delighted as a result are your thoughts.
As you know there's a history Jack Kemp Baigent and -- -- and others I'm having -- for gold standard I'm more recently Ron Paul is talked about it.
And it's virtue of course is that it puts at a commodity behind -- dollar and it guarantees its value.
That's really just way to express concern over.
The the very large quantitative easing the Fed's undertaken the fear that this will lead to inflation down the road if not immediately.
And -- I think that's really what we're looking at us just some some discontent about that the quality of monetary policy in recent years.
That the quality.
And the architecture of the Federal Reserve.
And its role in all of this.
It's about time for that discussion.
Certainly -- more broadly even in the convention is -- -- I think it's a fair point for discussion and that the parts I don't like this -- on the motives of for example chairman Bernanke are impugned.
I don't think it's fair to question his motives I do think it's fair to question the policies and the the the effectiveness of us perfectly QE2 Operation Twist ending going forward.
That's a -- a special moment everyone ought to -- -- because we are in very bad economic times.
His more.
-- which I have never crosses monitored I think there are a lot of people criticizing her awfully thankful for our QE's one and two everything you can -- that three.
But the fact is that governor -- says he will be working beyond.
Ben Bernanke as the person -- the person to fill the maturities of the Federal Reserve your thoughts.
Well I mean there are certainly other high quality candidates out there on the you know -- -- -- -- might wanna ask result is does Ben Bernanke really wanna stay on actuaries interests that are you know.
And the norms -- -- service but.
Know what an opportunity that rises with replacing the chairman is the next chairman has to go in front of a confirmation committee.
And and then get bipartisan buy in for the Fed's mission.
Gives the next Fed Chairman chance to say hey you know we're -- -- rescue the American -- you guys needs to your job.
So there's some virtues actually making a change in there are good people out there.
And hopefully it will not be necessary to focus on rescue that point.
We appreciate -- Douglas -- -- thank you very thank you.
