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So Republicans presenting a plan to avoid the fiscal -- the main points of the proposal include first and foremost of waiting.
Increasing tax rates.
Also eliminating deductions on upper earnings to raise an additional 800 billion dollars and revenue.
And one point two trillion dollars in new spending cuts.
The White House no surprise already projected re ejecting the plan the president just telling Bloomberg News the GOP plan is quote.
Out of balance because it does not include higher taxes on the wealthy so what now pleased to be joined by impairment of -- chief economist for IHS.
With his taking -- take you so much for joining us.
Why does -- that the only solution the Democrats be satisfied with is to raise taxes on the wealthy.
Well they clearly state that this position during the campaign and they feel somehow or other that they have a mandate for -- I'm.
Sort of skeptical -- clearly.
This is the sticking point is is the tax rate question on the wealthy.
However that's sad I think -- progress actually has been made in the sense that obviously the Republicans are now willing to it to raise taxes not rates.
On the rich and the Democrats are saying they're more open to entitlement.
Cots if you -- reform call -- whatever you wanna call it.
So they're making progress I suspect a lot of this is just negotiating positions a source point but it tells you -- -- singer -- for the Democrats they're demanding it.
Is there any way to avoid it.
Hot probably but I cannot no guarantees hear the question as.
How you know how far both sides willing to go down to the wire.
To avoid this -- and what kind of a fig leaf is the losing side if you will whether some Democrats are the Republicans.
Gonna have one when they come out at the other -- yet the -- I think we'll go down all the way to wire.
To your point the president himself just said a few minutes ago he's doubtful we'll get an actual deal within the next two weeks but we know the last.
Three years we've had these eleventh hour deals on.
Tax policy even on health care.
So I mean should we really just dead weight off New Year's Eve celebrations here before we get a deal and do you think it's really gonna come down to that.
These guys don't wanna go home they wanna have Christmas -- -- have New -- without this thing hang over there has.
I suspect by Christmas time we'll have a deal.
In the meantime watching the markets especially watching the interest rates markets no reaction at all there's no sense of urgency no fear.
Is a problem is that actually giving lawmakers a passing -- have any motivation to get this thing done.
Well it could be except that all they have to do is go back to the summer 2000 lap -- And and the other markets -- that the stock market not the bond market stock market had a real fit over the out oneself.
-- and I think I think complacency is is not gonna sort of -- into much.
And they know the nation's watching yeah they know that you know they're -- they're expected to figure this out I.
I was speaking with Martin Feldstein of Harvard of course yesterday and he suggested even if we get a deal to avoid the fiscal cliff.
The US economy is still in serious danger of falling into recession how do you see it unwinding.
Think the fiscal clips probably the single biggest risk if we avoid that fiscal cliff and we have a good shot at growing that rapidly but says if we -- to -- 2%.
I think there's a lot of good news out there consumers are feeling pretty good housing were -- -- so I think without the fiscal -- will do alright.
-- -- Tax rates more than likely are going up at least for some class.
You've got this slowing growth so you're not creating any.
New wealth and -- the same time think of the Federal Reserve.
Keeping rates so low for so long I know inflation isn't a factor yet but what if that comes into play later that next year we could be in serious trouble.
On the inflation front -- not terribly worried in the next year or two so that is a distant threat it's out there but not in the next year to.
On a tax increase that my guest says they're gonna phase in whatever tax increase that went in both phase events is not gonna hit next year.
But will phase in over a couple insurance which is a Smart way to go.
-- -- nervous always end our conversation thank you for your time.
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