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Martin Feldstein, Harvard University professor and economist, weighs in on GDP data and what action the Federal Reserve can and should take to boost e...
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We're joined now by Martin Feldstein the distinguished date economist and professor at Harvard University out here at Jackson Hole for -- and thanks for.
Joining us here -- -- Elizabeth let's start off with the economy.
We got some GDP numbers.
Earlier this week has said that economic growth was so.
One point 7% the second quarter.
-- we're seeing kind of mixed numbers here what what's what is the state of play in the coming -- your view.
Well short answer -- the economy's in terrible shape.
We are in -- deep hole.
We're crawling along at a very low rate.
We had to 2% in the first quarter and one point seven is the new estimate for the second quarter.
People are estimating the third quarter -- be about the same.
Just to maintain.
The current levels of employment.
Not make it didn't in the serious -- that we have we'll take two and a half percent.
And we really need to be growing much faster than that so.
Well we've had some positive news in the last month or so on housing and much better employment number -- -- awful numbers we have for the second quarter the economy still not doing anything.
Policy makers.
At the Fed can do some things that the fiscal policy makers and -- some things as well let's talk first about the Fed.
So what can the Fed.
Do here to try to help economic growth and I don't think.
There's much the Fed can do I think that.
Interest rates on mortgages are at all time lows.
It's helping a bit.
But another 25 basis points is not going to change things.
Corporate America is much more worried about taxes than they are about liquidity.
They've gotten lots and lots of available funds from investing small businesses.
Are having trouble getting credit.
But that's because the banks they rely on.
Capital shortages.
And lowering interest rates isn't gonna help that situation.
So we've heard from chair Bernanke and other members of the Fed and FOMC that.
The -- had fired a monetary policy is not a panacea.
We need some help from Washington on the fiscal Sunday -- you are an advisor to the Romney campaign.
You had a column.
In the Wall Street Journal this week.
Saying that.
Governor Romney's tax plan can raise tax revenue -- That column was really responds.
To people.
The so called Tax Policy Center who -- And -- the Romney plan would force me.
Large tax increase on middle class taxpayers.
Which just not right.
You might not like his ideas.
Blood.
What.
The arithmetic -- I reported in that Wall Street Journal article on Wednesday showed was that.
You could have the broad tax -- to 20% tax cut.
You could -- Eliminate the Alternative Minimum Tax you could do other things that he is prescribed.
And still not after raising any tax revenue from people -- comes under a 100000 dollars.
So.
What we need is much.
Clear oh.
If we can bring down marginal tax rates and as governor Romney proposes.
Broaden the tax base to recoup that.
The lost revenue and perhaps pick up some more revenue in the process.
That would be a good thing.
Are you advocating here supply side economics all over again oil -- that's what lower marginal tax rates is all about it is supply side.
Economics and work.
For President Reagan and it works whenever it's used and we're now seeing sort of the opposite.
We businesses and high income individuals.
Nervous about the higher tax rates.
-- just over -- horizon both the fiscal cliff.
And the Obama proposals for raising tax rates on businesses.
And households.
And so it's not surprising that we're not seeing.
Kind of spending and investing.
That -- need to get the economy moving but does this take care deficits.
No this was really this was not an attempt to lay out a whole plan it simply says that.
Those who accused the Romney plan of inevitably.
-- -- -- any increase in tax rates for.
Middle class taxpayers that was just wrong.
They said it was mathematically impossible.
To have the Romney cuts without.
Major tax increase on the middle class and what.
You can show is that.
If you go -- after tax breaks for hiring income individuals.
At the same time that you lower their tax rates you don't have to.
Do anything no readily feel.
No revenue shortfall to be made up by the middle class.
Real fast.
Would you come back to Washington to work at -- Romney administration and get an eight and I don't think that's in the cards.
But I hope that he is there.
To do that you know.
Reservoir.
Feldstein of Harvard University thanks for joining us on -- review.
Thank you sit back to you.
