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It's countdown to that fiscal cliff yes 35 days left for Capitol Hill to reach an agreement or not that before a series of automatic tax hikes and spending cuts hit.
Well today the council of economic advisors released a new study showing the big impact of letting some of these tax cuts expire would have.
On consumer spending with us now Alan -- is the chairman of the president's council of economic advisors and a member.
Of the cabinet chairman -- great to see -- thanks for coming in appreciate it.
Sure thanks for having me so the joint tax committee has come out with a reports trying to figure out exactly how much revenue we would collect if in fact all of the tax increases took place.
And they come up with a figure 82 billion dollars a year now that's.
That's only 8% of the trillion dollar deficit that we've been running for years in a -- -- risk.
Slowing down the economy with which a lot of people say might happen if you increased.
Taxes on the rich a lot of -- drug creators why we're slowing the economy for such as.
All -- at relatively speaking such a small amount of money.
Well first -- -- I don't think it is a small amount of money.
We need a balanced approach to Jeff and you have all I -- -- -- to be -- the deficit that's unfunded if you do that.
Well if you look at the present budget what he proposes raising one point six trillion dollars in additional revenue.
Over the next ten years and he proposes spending cuts as well.
The combination of which would put us on a sustainable path and that will strengthen the economy in the long or.
What I think we should avoid doing.
Having gridlock and not extending the middle class tax -- what we -- -- our report released today.
Is that -- the middle class tax cuts are not extended.
That will cause a consumer spending to fall by about 200 billion dollars next year that would be awfully big hit.
To the economy.
-- -- -- And the businesses as well and I'm holding the report right now and it was done by the National Economic Council and it it specifically says the middle class tax cuts and the impact on consumer spending.
And as you look at data and it obviously we don't -- -- see that but everybody spent you know the high and the low end -- the question becomes.
How do we come to this agreement and we keep hearing that this term of let's let the tax cuts today.
For anybody -- -- -- 50000 or under now Warren Buffett came out with with an op Ed in the New York Times saying maybe we ought to make up 500000.
Because to a 50000 with a family forty -- before Alan it is not rich and if their tax cuts expire as well they may be in trouble.
You think there's any wiggle room on behalf of view the president advisors.
To move that 250000.
Number a little bit higher.
You know we need to raise a sufficient amount of revenue so that we're on a sustainable path.
If you look at what's happened.
Over the past decade we cut taxes.
At a time when the economy really couldn't afford it right added to the deficit we fought wars on a credit card.
We added an expense appropriate prescription drug plan without paying for -- So sacrifice is going to be required to put it the US government back on a sustainable path.
But ultimately that is what will help our economy now.
-- what about the idea of deductions and -- -- -- guys are just just in the beginning stage of negotiations even though the deadlines approaching quickly.
Why not put -- 25000.
Dollar cap on deductions.
Which would cover the overwhelming.
Majority of Americans put a 25.
Thousand dollar cap and deductions -- according to the Tax Policy Center that would bring in one point three trillion dollars over ten years which is 40% more.
Then raising the top marginal right.
Well from his very first budget the president.
A limit on deductions allowing people in the upper income groups to deduct at a 28% rate so that you and I get the same benefit from a charitable donation as Warren Buffett does.
And additional revenue.
Is required to come from allowing the top rates to return to where they were in the Clinton years which by the way was a time in the economy did quite well.
I remember I worked in the government at that time we added 23 million jobs people at the top did quite well people in the middle on the bottom also did well.
But so will then the question becomes some what do we need to do that to make this happen have that the president has proposed that cap what's holding it up that seems like a reasonable approach.
Allowing people to have some deductions just not all of the deductions and as David mentioned it.
Prince in a -- of -- there for the for the government hopefully to use wisely.
Well it's the deductions as well as allowing -- top rates to return to where they were during the Clinton years.
That's what the president has supported all along that's what he campaigned on.
And it's House of Representatives were to pick up the bill that the senate passed extend the middle class tax cuts and that'll go a long way to solving our fiscal cliff issues.
Chairman Alan Krueger what a pleasure to see -- sir thanks for coming -- come back and -- us again.
Thanks for having me -- really everybody.