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Art Laffer on the Fiscal Cliff

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    Laffer Associates founder Art Laffer on the fiscal cliff negotiations.

  • Duration 6:42
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Are right so are we further apart than we were 24 hours ago an advisor to the president now telling fox quote we took a step back today.

The last 24 hours feel a bit uglier.

In a moment will be joined by Republican senator Kay Bailey Hutchison but first art -- chairman of Laffer associates.

And former advisor to President Reagan are welcome back to the show thank you very much -- you look at the press at this plan that's on the table from Republicans right now.

And are calling for higher taxes what do you make of that.

While they shouldn't be calling for higher taxes but frankly something's gotta be done and that -- all those taxes are gonna go up if we let it go over January 1 and.

I would like to see some of the tax cuts extended -- that would be great.

I'd like to see them all extended but that's probably not gonna happen so I think the Republicans are moving in the right direction -- and I think it's the right thing to do politically as well.

Wow so mark this moment in history the great art lovers saying higher taxes is okay -- but I never heard you say have personal life.

Let me ask you this though because I was comparing the two plans side by side what Republicans have put up with the president in the White House -- put out.

And let me tell you.

It -- these two plans are different but not in their effects on our over all debt.

Ten years from now either plan goes into effect we're gonna have 2221.

Trillion dollars in federal debt.

What do you make of that.

It's a very large number and it's it's a real burden on future generations and it makes it very difficult to get a political economy of growth going.

In 2014 or 2016 when politics will change.

But that's the way it is that's the way it's been going for a long while -- -- and it's gotta stop but obviously today is not the day it's going to stop.

I guess not you know it we're talking about.

All the other taxes that are part of this whether it's AMT -- and so much at stake here are you confident that some kind of agreement will be reached.

I I think some will be reached yes you know the problem here Gerri -- the Republicans in the house.

Are not very Agile it's really hard to control 235.

Members they all have different views -- -- in the.

The president has a huge advantage at least in game play but what's this is -- over.

Then the president will only economy next year and I think next -- economy is -- look pretty bad and I think it will inured great.

Damage to -- Democratic Party in 2014.

So I'm hopeful in the long run but.

It won't be better this year or next year.

If you said it's okay by you raising taxes a million -- you know -- look at Republicans are taking are responsible stand here probably as a way -- put it.

-- some Republicans in the house even now saying that.

You know this isn't a tax cut.

The leadership bringing it is a tax cut it's not a tax cut its attack -- for some people it seems to -- everybody is spinning everything here.

Do you think Americans are gonna get the real deal on -- so many people feeling like they're being misled by both sides of the aisle.

And they are but the -- you know the point is Jerry is that if we go to January 1.

All taxes rise right and the question is if you pass a bill now it's you know that excludes some of those taxes that are going to rise.

IE they will rise -- at least get some of them won't -- that won't rise and that's the way I look at it.

You know the president does have control the White House he's got control the senate and he's got controlled -- negotiating situation because.

You know -- all those tax cuts go up I mean all tax rates go up and.

I think no way -- do the best he can the way John Boehner put it is he wanted to protect his many taxpayers exactly -- -- -- take you back a couple years.

President Ronald Reagan.

Saying we can't spend ourselves rich one of the big debates here and -- -- -- weigh in on this issue to be no serious discussion of where to curb spending.

We're gonna do with entitlements.

That's spending out of control Medicare Medicaid Social Security.

Off the rails and -- -- the majority in the hub of the botched.

It is but what are you gonna do about it when the president doesn't wanna do it and the -- doesn't wanna do it either.

You know the Republicans in the house just don't have control of the political.

Economy today and they could use the debt ceiling and I really hope they do to bring spending cuts in place but.

This is not the way we can really make a major overhaul of the economy you've got to wait until you get some sort of consensus like we did with Reagan.

And then we have -- 86 tax act Jerry which -- rating work it rocket ship to the economy straight up.

And by the -- -- the Democrats voted with us back then as well I think all but three voted -- -- so well is amazing.

If there's a lot of the flat strange alliance is being built here -- only a lot of at at you know people you know saying one thing and doing another and -- the Democrats -- one point head back to plan not too long ago.

For encrypt tax increases on people earning in -- -- million dollars or more.

Just -- it it's not that long ago we were talking about him at three for one deal cutting three dollars and spending for an increased one dollars in taxes now it's one for one.

Has -- gone too far.

In trying to find some common ground with the president that's what conservative critics are saying -- tonight -- -- yet.

And he's under a lot of pressure -- -- but the question is I'm sure he knows his votes well and bidders trying to save as much as he possibly can.

To keep the economy from collapsing and you know I think he's doing a great job of trying to do that.

I wish she didn't have to go this far and I wish we could have gotten extension of all the tax cuts but I don't think that's possible.

And Boehner I think he's doing the best you can -- and that I admire him for doing that although I wish we could have gotten more of -- tax cut through.

You know -- said this morning at a press conference that real discussion of tax reform reforming entitlements will be have to take place next year.

But if that's the point and what kind of leverage -- service will the Republican Party have to make that happen.

It's not gonna happen in this.

In this next two year period -- just you know real reform is gonna go happen you may get a piece here or there.

But to get something really fundamental changes -- the -- -- the low rate flat tax spending restraint sound money free trade.

Minimal regulations that's not gonna happen until the politics of this country changes.

We're gonna change the senate and the White House to be able to get that type of real change and that's gonna take several years -- before that really takes.

-- on -- oh boy that beyond which was included.

May have to wait longer.

Well and -- art Laffer thanks for coming on tonight it's always a pleasure to have you wanna show when they hear what you have to save so much experience with this topic thank you so much thank you very much Jerry.

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