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I don't -- as we've been hearing that fiscal -- is getting all of the attention but our next guest says that what we should really.
Be worried about is expanding consumer debt if -- -- -- -- those director of economic research at the reason foundation Anthony.
Why I think that this should really be to focus right now what do we really target right.
-- we're talking about credit card debt talk about student loans and a lot of this is -- chuck not private that beyond just consumer credit.
That's mortgage debt which is not.
Deleveraging as fast as housing prices are so going in -- 2013.
-- have a lot of people that are paying down debt which means they're not spending money in the economy and more importantly.
We have a lot of businesses that are going to be paying down their debt as opposed to expanding their businesses and -- -- But the idea with this that tax increase it's supposed to mostly affects wealthier Americans obviously you don't have threshold to fifty for families have.
But he my points he went -- -- in this present question to you.
These are people that can handle.
Debt burden so you can increase the taxes.
Some people you can -- or taxes and should have handled a lot of those people that are in that category -- total return of 50000 those are businesses raising taxes on those businesses means that it they're gonna pay down their debt.
Even slower I mean we haven't seen businesses expanding into the -- -- here is refinance that debt.
Yet they can refinance that that they're not refinancing that that they're -- -- they haven't been borrowing if you look at the past couple of years entrepreneurship is on the decline people are not expanding their businesses.
We know we know that the job market is still really really bad.
People that regulatory uncertainty is -- huge part of it doesn't have the broad sense that the economy is not really going anywhere.
Raising taxes on individuals raising taxes on businesses.
Doesn't move us anywhere yet does move us forward but the -- the reason why it's because there is that debt to pay -- of the fiscal -- is important.
But it's on top of the fact that consumer debt mortgage that's really.
We're talking just about small business because on the corporate level -- big public company it refinancings about it all time high right yeah that's awful to promote we're talking about small businesses and businesses that are run off of household balance sheets.
Consumer that was slowing down because people were happy you know borrowing less spending less because -- -- things are back so credit card credit card debt has -- a little bit but consumer debt is at its highest peak in history right now we were falling into tinsel 2010.
We're now up to two point seven trillion dollars in consumer debt which is the highest point -- are -- and America so how quiet -- that's a bigger problem and the fiscal clip from meet Heidi how do you think compare those -- fixing one thing we have to know is that you know cutting spending which is apart the fiscal -- that's an important thing.
That we have to we have to go through a period of austerity would have to lower the amount of spending the governor because as we're just gonna be -- -- -- -- expanding -- -- economy you know it's gonna have -- what that's gonna have -- that's not have a short term impact sure you have some defense people that are -- and are going to lose their jobs.
But -- the broader picture is.
For the next several years there's a lot of debt that still that we built up during the bubble that still has to go away the fiscal cliff but the short term.
The outlook for the first couple months going -- 2013 if it has any kind of negative -- in the economy it's worth it to get to that.
Consumer debt and mortgage stead as a long way to go so when you look at the retail sales number that came -- for October it was a huge disappointment rose much less than expected so.
Do you look at that perhaps is good news according to theory about consumer -- people aren't spending money.
Two -- to certain agreement is good the credit card debt isn't spiking because that's just like another -- -- bubble.
But end in you know to a certain degree we don't want people to just be going out and spending.
Just to sort of like creates are temporary because you know.
Bump in the economy but the reality is is that going to waiting to that process of not spending of who may be less money being spent a Christmas presents.
That he just sweet spot -- right because he consumer spending for strong economies like chicken and -- egg situation so.
For an average person what's your advice in terms of how much to -- how it's spent to do their part for.
And that's going to be different but that's going to be different for every household -- you know you've got to look at the a look at what's wise the simple fact of the matter is the past -- -- what -- of -- income should -- be saving vs -- I think the wise thing -- you should be saving about 30% but it you have to -- if you're saving 30% and -- you're taking on debt that's gonna actually racked up more interest payments sorry that's not -- episode that may be better to take that money actually pay down your debt into -- to save in the near term.
Thanks so much if any -- -- -- so much for coming on the care.
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