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Doug Holtz-Eakin, former Congressional Budget Office director, on how he forsees the fiscal cliff talks ending.
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Joining us is Douglas Holtz -- his former Congressional Budget Office director and the president of the American action forum.
-- good to have you with us I have to say is.
I don't know what your reaction was but as I watch these markets take off by I didn't see the strength of the president's words that would warrant.
Such a powerful reaction.
It's -- is a very naive reaction and one that is likely -- vs the disappointment -- -- I mean.
We're in a situation which is economically quite interest there's no question about that if we were just simply -- heading off this cliff we have.
Very strong negative market action big declines in confidence recipe for recession in my view.
And one that would not be easily reversed despite some people's claims good.
-- did January go backwards somehow so now this is dangerous that that's all the risk to it and in this circumstance -- about that kind of danger.
Where we have already committed to raising taxes -- the new Health Care Reform and letting the payroll tax holiday go away.
There's a real premium placed on not raising other taxes and getting rid of the unwise and mindless cuts across the board.
I don't see that falling into place automatically the president's promise higher taxes that's politics over common sense.
Politics over common sense -- were not even -- discussion.
Of the defense cuts under sequestration right we have heard all ways some some nice but welcome positive words.
From the president.
He did -- -- encouraged by the fact he did talk with Jamie Dimon and other CEOs over the weekend.
-- I think it is important for him to reach out and engage.
I would be much happier he was spending his time on the weekend talking to John Boehner.
Majority leader Reid.
You know.
A minority leader Nancy Pelosi and Mitch McConnell and those are the the -- and -- are using volatility.
Are you suggesting that the president would in erupt the senate and congressional.
Thanksgiving holiday.
Just because our national crisis.
I stand -- -- what do you I -- what was I saying well you know we that we need to deal quickly mean we're we're seeing the business community.
And their confidence to climb -- we had negative invest in the third quarter of this makes it worse.
It in those circumstances it's hard to imagine that that household sector will remain strong it's it's hung in there so far but.
How we're not gonna get real growth with -- business confidence and negative investment so this deal has to get settled and settled quickly in my -- It was -- liking that Treasury Secretary Timothy Geithner.
I chose now -- the time to talk about the importance of lifting.
As he put it through infinity of the debt ceiling.
That's imposed irrationally by congress.
I could not believe that the Treasury Secretary facing all of the issues that we do.
As a nation on this economy this fiscal but would choose now to talk about.
The debt ceiling for crying out law.
Yea it's a mystery and we have three problems -- the fiscal cliff and then there is the debt ceiling but that doesn't have to -- until February march and there's certainly no reason I'm exposed and that's a dangerous.
Step in my view.
And then we do have a big debt problem and now the president has said repeatedly that.
-- he wants a balanced approach and we've seen lots on taxes but I haven't seen a plan on the spending side and I'd rather see the sector and the treasury.
Laying out a genuinely balanced plan that showed us how we're gonna solve our debt problem as opposed to dragging the debt ceiling into the fiscal -- discussion.
And you're outlook right now you've suggested that your little worried about the excessive.
Enthusiasm.
-- the a bond yields.
What do you that would have a I would love to be able to -- and say you know Lou there's no chance that our elected leaders would have a self inflicted recession on the American economy that I can't say that I think there's.
A substantial probability that we will in fact -- the fiscal cliff and regret -- deeply and so.
I would like see that probability go from something in double digits down to zero and the only way that happens is for the leadership.
And the president to sit down into the hard work necessary strategy.
Douglas -- -- -- always good to have you with us thank you thank you -- and -- happy Thanksgiving to you earlier -- -- --
