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Former Secretary of Commerce Carlos Gutierrez on the potential consequences of reaching the fiscal cliff.
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Of layoffs joining me now Carlos Gutierrez former commerce secretary under president George W.
Bush.
Great to have you on the show sir let's start with this meeting the president's calling with union leaders with business leaders.
What can they do that congress can't.
Well in the the problem is that they can't do much because.
The the barrage.
Of taxes in the barrage of regulations that are being thrown -- businesses.
-- -- they can do is defend themselves from them but I don't think they can reach an agreement with the labor.
To say that were not going to reduce the size of our workforce.
Even -- all we're not going to make profits because of Obama care.
Everyone is criticizing Applebee's but the that we forget that the purpose of businesses to make a profit and.
It is as -- make a point here Applebee's.
The Applebee's in New York -- said that they're not gonna expand to new restaurants they're not gonna add people who staff because of -- And you know what Jerry that's just the beginning.
Mean -- -- things are happening.
All act absolutely I meet the -- 11 provision in now Obama care -- If people -- less than thirty hours they don't have to get health insurance from the company right we're gonna see a whole load of of of -- part time jobs.
It is that the unintended consequences are such that I don't think we can see -- -- Well let's talk about you said that -- business and unions can't fix this problem obviously they're not running congress they're not voting on a budget they're not.
Voting on how to change spending in this country.
We -- say the GOP has more leverage than many people.
-- -- -- Well I think that you know and -- that term I think the president was.
Was being very tactical.
And was looking forward to his second term -- to being reelected.
He has been reelected.
Now he's thinking about his place in history.
And I don't think he can afford a legacy.
Whereby.
He did nothing to avoid.
Another recession a fiscal that this fiscal cliff.
A credit downgrade.
I mean this is gonna be a disaster for the country so.
I I think he -- to get something done he passed the compromise and apparently you know and between Boehner and the president.
There have been.
Statements that reflect a sense of compromise.
Well it reflects a -- a compromise I'm not sure that's reality I think some of the statements had been -- But once statement that I seen from senate Democrats saying that we need to drive over the fiscal -- -- -- the only way.
We're gonna eventually get anything done now on the other hand people say we're gonna lose two million jobs -- go straight to recession -- right.
Well if we let these tax cuts.
If we increase taxes.
And we let these tax cuts.
-- the tax cuts expire.
Who were in deep trouble I mean we're we're going straight into.
A recession and then at it you know -- -- that's at the expense cuts that would be a you know a pretty easy bet.
The the problem is is going to be that.
We need the Republicans.
Need to stick to their guns on this idea of no rate increases.
And let's focus on.
Revenues anyway are ultimately what we need -- revenues not rate increases but but here's a thing.
The Obama care.
The Republicans have already given up rate increases.
There's a three point 8% tax increase starting.
January 12013.
On interest income so if I pay 35%.
It income tax I'm going to now pay an additional three point 8% on interest income.
If we let the bush tax cuts.
Obviously -- expire for over 200000 dollars a year that means that people will be paying over 42 and a half percent.
On interest income and.
Big and other locations out there mr.
secretary that that means that the stock market is an up plummet like a stone over the coming months it's already started doing that.
Do you see broader implications for the stock market for the economy.
Yeah I look a small business startups are down owner they're going to continue to be down.
We have fewer IPOs now than we had ten years ago.
Companies just don't want to be public because of all of the regulations.
Venture capital is down.
There's less investment in new business expense is this that this all does that.
I I think the fault is directly of the government because they have added ace tremendous lot of insecurity I mean what we're talking about -- Obama care.
As of 2014.
A barrage of provisions a barrage of taxes.
I mean what they are saying is that.
They're declaring -- business this idea that what Applebee's is doing is wrong.
Is.
It is is unbelievable.
-- they have to make a profit if they can't make a profit they have to reduce their employment.
Well and you say that's gonna happen with a lot of businesses across the country presumably.
There are lots of ways.
Act to get TS presumably there's more than one way to find a solution to this what do you think would work at this point to get these two sides are getting to find some kind of common ground to get the problem solved.
What we're not we're not gonna do the four trillion.
Reduction that.
That the president was talking about the beginning.
Our tax taxes are designed to bring in about 39 trillion dollars in ten years.
But we actually bring in about 36 trillion.
So is three trillion dollars of deductions to work with.
We're not gonna get three trillion what we can get a good chunk so I think we'll probably end up.
With something around the order of one trillion dollars which is a good step forward it sends the right message.
But it sold -- we have so much more to do to -- Jerry Howard our deficit.
Is about the same size as a percent of GDP as Greece.
I now it's it -- you don't think problems that's for sure and I I really appreciate your coming on tonight.
It's always a pleasure thank you -- secretary Gutierrez great to have you on thank you so much.
