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While the president is tweeting a short answers about coming tax increases Wall Street's holding its collective breath with the rest of the world for some kind of resolution.
To the fiscal stalemate in DC.
Trillions of dollars -- -- -- not just in government revenue but also in non allocated cash it's just been sitting on the sidelines that cash.
Could either go towards investments in the US or perhaps to some tax haven like the Cayman Islands depending on how these negotiations and -- For an idea of how these negotiations will and we turn to Larry McDonald senior director of new edge of former vice president have Lehman Brothers and author of this book.
A colossal failure of common sense which is a colossal -- all over the world is now -- like twenty languages.
-- Well I everybody can identify so -- what we sell a million books a break even Lehman stocks are what is yeah I imagine it's gonna be awhile before that's up.
What's going on -- all the focus is is between the president and Boehner but you're looking at another negotiation it's happening between the vice president Eric Cantor.
Tell us about that.
Well if you think about 2010 there was a ton of political damage done to the president and -- and the speaker.
They failed that I think really they're trying to spread -- the run the risk here.
If you noticed the last ten days the vice president's been mysteriously quiet you know us they keeping him quiet little bit like trying to quiet the Arabs -- Arab Spring might set a that's a good point -- -- vice president is -- somebody's sitting on them so he is negotiating now with cantor are they coming up with deals that we haven't seen in the press yet they have accomplished a lot more.
Think -- know in the press I think what's happening now is.
As we saw in Europe last year the most dangerous thing for the markets is when politicians start communicating through the press.
Investors watching us right now our home they're getting which -- left and right.
But I think behind the scenes they've accomplished a lot more because you look at the president's plan you look at that Republicans plan their miles apart.
Behind the scenes peek inside game they're actually a lot close.
So so was Tim Geithner coming out and all the networks yesterday with his real hard core plan the one that was issued on Thursday night.
Which essentially doubled the amount of tax increases from the private sector that they had talked about before it is that justice subterfuge is that being put out there.
And when the real stuff is very different the real negotiating stuff.
They're all trying David to appease the base right there there really their collective caucuses to look at Republicans I don't think the GOP caucus.
All the congressman in the -- and senators in the house and senate.
They won't really believe that -- there has got them a deal until around December 20 in other words.
If this is all just posturing to -- really peace the basis but it all comes down to what the president wants here does.
That after all I mean he's a guy he said -- -- Said to have four years ago look I won the election restocking -- Paul -- he's he's in that mode right now saying because I -- I get what I want.
He had -- -- some twitters today he he was tweeting with people all over the country and some very revealing answers I think even though tweets are pretty small.
This is one from somebody name hunter says what is your opposition to taking away deductions.
For the top 2% rather than upping their tax rate it seems like a reasonable compromise.
There's not enough revenue and -- you and charitable deductions.
It's that are -- less revenue equals more cuts in education -- that are.
But what he's not mentioning this is Clinton's plan from the White House -- what he's not my -- he wants to both.
Raise the rates and it and deductions in order to get to that big -- one point six trillion over ten years.
And that's the problem is -- my greatest fear is that we're gonna have near term.
Tax increases in the cuts are gonna be -- out over five to ten years that doesn't work that's really -- slightly and we get those cuts at all if we get -- We have tons and tons of fresh data my Twitter handle -- convert bond have been having going back and forth of people.
Europe we've got tons of fresh data on near term tax increases with long term spending cuts.
Equals pain or things have -- -- -- my website large she McDonnell dot com is when you re east taxes on.
The money supply RM two money supply is the lowest since 1968.
We've never raise taxes David ever.
It's that your money supply that low in other words there's a big difference between -- -- that the Democrats love to say no during the Clinton years they raise taxes didn't hurt economic growth.
The problem is if you raise taxes -- money.
GDP an economy growing 1%.
That is devastating OK and.
-- -- this is that they lowered tax rates during the Clinton Era they lowered the capital gains rate -- from 28% down to 20% in 1997.
That had an enormous impact on increasing productivity brought in twice the amount of revenue from capital gains that they were getting with a higher rates actually the president answered a question related to this let's put up the question and Mike.
-- -- He says Mr.
President why won't keeping tax rates lower across the board encouraged.
More hires and therefore more tax revenue now listen to what the president answers.
He says high -- tax cuts do least for economic growth and cost.
Almost one trillion dollars extending middle class cuts.
Boost consumer demand and growth but in fact as I said when they lowered tax rates and capital gains -- -- increase growth yet.
So the concern is is that if you increase rates right now -- will cut down on the growth in the economy we've seen in Europe -- -- they've increased rates.
In the near term on that slow growth economies.
And they just did in France they tested it in Spain and existed in the UK they did in Greece they raise the value added tax four times -- last.
-- seven years.
It's devastating consumer spending and that's what we're we're heading on the same Europe.
Larry McDonald at new edge senior director good -- -- concede thanks for coming in appreciate it sandy.