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First Trust Advisors chief economist Brian Wesbury weighs in on the debate over government spending.
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-- as the country continues to creep closer to the edge President Obama and house speaker John Boehner.
Spoke by phone this weekend as lawmakers trying to work on a deal to avoid the fiscal clamp.
Joining us now is Brian Wesbury chief economist at first trust advisors and Brian.
Say you heard all of that information that came before you I mean give -- respond I'm sure you were chomping at the bit while Peter was talking their you know you.
Well exactly you know what one of the interesting things about 401 -- -- IRAs is that.
All the taxes eventually get paid so all we would be doing is literally stealing from the future you know we.
You don't get away with not paying taxes -- just because you put money into an IRA you get away today.
But you have to pay when you pull it out in retirement.
The second thing is there is no doubt.
That today people can lower their tax bill it makes it more effective I think it will definitely.
Lower the savings rate if we were to do that.
And and then finally if you know -- used -- that hundred billion dollars is what we could race that's a drop in the bucket we have a trillion plus dollar deficit.
We need way more than these kinds of things that to fix this in fact we need to cut spending that's what we have to do -- the only way we're gonna balance this.
-- -- -- in fact I mean you make a point that not everyone has made that one of the biggest impact any even we're -- just the impact on the stock market of what's going on right raising taxes on investment.
Does it even hurt as much as.
Just how much government spending is going on that's really the heart rate equation that's killing the market hurting investors explain that to -- -- -- -- you know I'll try because this is this is the heart of economics what we have new technologies -- -- fracking or.
The cloud or or this Smart -- or the tablet.
Those new technologies throw off new profits productivity efficiency.
And big gains this society makes from these technologies.
They get reinvested.
It sort of let us go -- the savings that we have from using a tractor on the farm so the price of food goes down so that.
That money those resources get -- directed into something new like inventing an automobile.
And if the government steps in.
And spends that money takes it away borrows it taxes it and spends it.
-- we don't get the full benefit of the technologies that we're inventing that's why we have an 8% unemployment rate that's why we're growing 2% today.
If we had a smaller government we would be growing faster and we would have more jobs and lower unemployment.
That's right we're all talking about who's gonna get it bit cut out of their slice of pie as opposed to growing the whole -- right now -- exactly set very frustrating though.
Get go -- real quick and.
I was just gonna say the only way the only tax that they could come up within Washington.
They could even come close to filling that and and and paying for the deficit today.
Would be the value added tax gosh that tax will hit hundred no middle class that's the one that -- the middle class so this is the way we're heading if they don't know spending.
The middle class better look out all right Brian Wesbury that's that that's care right thanks so much.
-- so I'm not sure.
