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Richard DeKaser, Wells Fargo economist, on tax breaks and how they impact the fiscal cliff.
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Priorities are jobs and growth.
Joining us now Wells Fargo economist Richard DK's -- Okay sir do you listen -- you heard what he had this today focused on the middle class extend their tax cuts -- make a difference.
-- for the economy yeah.
Yeah oh absolutely absolutely let's be very clear the fiscal cliff is a big deal.
In its strict -- broadest interpretation we're talking about three and a half to 4% hit to real GDP next year 2013.
-- preventing that from happening is critically important at a minimum if we prevent taxes from rising and those -- household incomes under 250000 dollars.
That would go a long ways towards preventing the full brunt of the fiscal -- from playing out.
Additionally I would add that if you're really worried about.
The impact of taxes on the economy.
It is unambiguously true that the people who spend a larger portion of their income are down the income scale.
So to the extent that you have to.
Go for half a -- instead of whole loaf in terms of -- allowing taxes to revert.
Configuring it and situated would be more helpful Li I guess.
I guess my concern is you know the wealthy got there 'cause well there aren't -- wealthy either Smart they have access to really Smart people in -- Smart people.
Are going to shelter their money send it overseas do lots of things that this so called revenue they think they're going to garner from raising taxes on the rich.
-- -- -- -- -- -- -- I mean there's always an opportunity for some tax avoidance.
But for the most part rude you know income taxes are captured through withholding schedules.
You'd have to be pretty crafty in that it depends on what else is being done frankly throughout the rest of the tax code so.
Principal way that very affluent people have been able to.
Shelter their incomes from taxation for example Mitt Romney is by taking advantage of carried interest and capital gains.
So the question is does any tax reform affect those elements of the code as well or is it so isolated that opportunities for tax avoidance or hurt.
-- Angel I think Smart people.
Stay Smart for a lot of reasons and they're just Smart they're not.
They're not thieves they're just Smart let's talk about some of the economic numbers that we got today we got.
You know retail sales down everyone's blaming sandy but really if -- -- or is it just more economic malaise people just nervous.
We have the holidays coming.
I'm not sure we're gonna see people gone out they're spending big time -- -- I don't think sandy is the whole story but to you have to understand you've got to look back a couple of months we had very very strong results in.
August and September so in that regard it's not unusual to give back something after.
Actually was about a 12% -- rate of increase in each of those two months very.
Additionally idea I idea I don't think I share your concerns.
I look at the household sector on balance.
Consumer confidence for example is now at the highest level it's been in.
About five years.
Wealth is rising we lost sixteen trillion dollars in household wealth during the crash but we've recovered about thirteen trillion over the past three years.
Yeah yeah.
Yeah excess of that wealth do I am meaning that I'm singular personal experience I found package refinance my home -- go put on -- kitchen.
No no absolutely -- right credit conditions remain very stringent.
By any historical standard but then if you ask yourself where is that going.
The evidence at least looking back has been that credit conditions have generally -- to remain very tight but directional at least are using up.
And so competence is there wealth is going in the right direction credit remains tight that's offsetting the wealth effect but it's at least easing rather than tightening.
And finally the most important thing is simply the labor market.
While we -- there's good reason -- -- should be disappointed with the results there.
Nonetheless the pace of job growth has been picking up and that's where people draw most of their income ultimately they're spending from.
I sat.
I don't share -- -- do this in your right but I hope that you prove me wrong and that we do have a find jolly merry holiday season nap time until recently gave -- yes we'll come back and we'll do get out thank you sir.
My -- -- we have some breaking news oil closed.
