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Will Higher Taxes Help the Economy?

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  • Description

    First Trust Advisors chief economist Brian Wesbury weighs in on the tax-hike debate.

  • Duration 3:57
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This transcript is automatically generated

Thank you are in our next guest says what he thinks is the economic argument that adds to that political discuss she just been hearing.

For the last few minutes so we bring Brian Wesbury NP's chief economist first trust advisors and it was -- distribution talk that.

It is in this -- video President Obama mean really when you take away that.

In the politics and then socialism always -- buzz words of people attached to what he's really talking about I'm sure back then but -- More portly more recently higher taxes he wants higher taxes for the wealthy either.

To re distribute for what he would say it's fairness or you might argue it's a close and and to fight the deficit.

You have a different argument terms the effect of higher taxes on the economy.

Yeah -- -- what you know we we know that when you raise taxes you reduce the incentives to work.

To invest and to say I mean all of that is true.

But really what's interesting about this Connell is that it's this spending that drives the taxes -- day.

Let's take let's take away defense take out the wars take out all every dollar we spend on defense.

-- defence government spending is at an all time record high we have never in the history of the United States redistributed.

Right more income.

And we have to stop you for once I'd try the economies haven't so many -- problem and the reason is.

I -- -- just explain the chart we put up on the screen right now the Brian data charts that's why when explain it.

-- -- YouTube but just to tell you what you're looking at government spending percentage of the economy.

Verses.

Stocks vs the Dow yet.

So the yellow line of stocks he words going up there -- Illinois back in the sixties and and the Blue Line is government spending it tells you what Brian.

Yeah well it's very pretty very clear if you look at that chart.

Back and when LBJ Lyndon Baines Johnson became president 1965.

We passed the great society programs government spending shot up and the stock market went nowhere for seventeen years then.

Ronald Reagan came in and even Bill Clinton.

Right lowered and reduced spending as a share of GDP.

And the stock market exploded and now in the last decade.

Under President Bush and then Obama government spending and shot up again no -- stocks -- flat they have for the past decade.

A long time camp I wanna ask you one more question because I think it's important did you come on the show all the time.

And you've been saying.

That sadly even it out a relative optimist on economy in other words you -- saying to people -- this is not a mess this economy is not collapsing.

But you're essentially making the argument for what is the Mitt Romney economic plan or something close to it so -- -- -- -- is support Romney who is once -- of the date they might say.

-- this economies of messy got to get rid of them and try something different.

You're making a very difficult political argument -- think things are getting better and we need to try something different.

Well.

Not not that they're getting better there it would look were only growing 2% and we have 8% unemployment that's a France a French.

Like economy this -- we can do better we can be the American economy of the eighty's and ninety's.

And in order to be there we have to shrink the size of government we have to cut spending.

And so my point is -- -- see what I'm talking to as investors Connell now -- necessarily just voters investors.

We -- the cloud we have hydraulic fracturing right fracking we have Smartphones tablets all these things are great new technologies.

They could.

Lift wealth even more and but they are lifting wealth and that's why wanted people to own stocks and here the markets up over a 120%.

In the past three and a half years -- you can't deny that investors have done well that have stayed optimistic.

But we can do -- much better we have to get the size of government down.

Otherwise this -- west we will collapse we will turn into Greece.

If we don't change course and do it soon all right as always Brian -- thanks very much appreciate it.

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