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House -- working its way to a resolution but Washington is at an impasse over how to -- 9% of Americans access from going out December 31.
With more on this Harriman Ber averaged chief economist for the IHS.
Former commerce secretary and John fund columnist for the national review welcome all great to have you guys here on this very important -- You know John we -- talking in the break just a moment ago and you were saying it's really congress is the grinch stealing Christmas house so.
Well they should have handled this months ago and administration should have gotten together with them.
The senate has just left town for Christmas.
They haven't passed a budget in three years.
And here we have vast majority leader Reid saying we're not gonna do anything the only -- what's gonna pass the senate bill but something like a kid -- to -- picked up his marbles and go home.
Now -- -- the house is not covered itself in glory either but at least there's a proposal on the table and you should at least debated in both houses for the senate to just leave -- don't.
Is beyond irresponsible this -- -- -- like -- middle finger to the American people because you don't believe me.
-- -- if middle class taxes go up for everyone on January 1.
We're gonna have a really bad post Christmas.
Carlos I was speaking if somebody -- talks to a lot of Democrats in Washington.
And he was telling me he said look Gerri the heat's not on high enough.
For these two sides to get together what will -- take.
Do you think for the Republicans the Democrats and some kind of to come to some kind of common ground a resolution.
To agree to something.
Well it'll probably take god December the 31 at midnight you know -- -- everybody wants to show that they're really trying hard and and one of the reasons we we probably don't have a deal today is because it's too early.
That the problem is that when we get a deal -- party in complete.
-- where -- these cuts coming from it's easy to raise taxes.
But this isn't the first time that that that cuts have been promised and not delivered its not something that Washington does well.
And that's the big concern.
We what you're absolutely right about that chairman if you look at this your economists.
What's at stake here for the American people.
Well a lot depends on how long we go off the cliff -- -- -- off the cliff for a week.
It's not gonna really -- things that much for -- for a month or two.
And I think that's a recession scenario for the US economy because those cuts.
And those tax increases.
Could have a big effect three we figure about 3% of GDP that's enough to push the economy into -- -- a lot depends on how long -- off back -- You know what I wonder about John and I think he'd be a good person to answer this.
It's not just what's happening to taxes and it's not just what's happening -- AMT and all the other capital gains -- -- -- it's the fact that Washington is broken.
And I think that makes a lot of decisions for report business -- whether they're starting to make decisions like maybe -- leave the country.
Booming -- -- my business maybe I won't hire anybody.
What is the net net impact on American business.
Yes well the story of the last three or four years the weakest recovery we've ever seen.
People not she knowing what the futures -- to hold.
And this fiscal cliff is the ultimate uncertainty.
I think we may tip in to recession even if the fiscal -- is you know a very short duration.
So what we have to do is recognize.
We're all Americans we have to be competitive -- of the world.
It's time to have a big tax reform we get it and 86 that set the stage for the not only later Reagan boom but the Clinton boom years and we have to do it.
And excuses won't work.
And frankly I think congress.
We'll finally get to the point where they've exhausted all other possibilities and that's where we always know they'll end up with only one thing to do -- that may be the right thing that's the optimistic scenario unfortunately.
There and try everything else that's wrong before -- get there.
Think that's interesting -- do you agree with that -- that it's all about tax reform and that's what this economy needs.
Well there's no question that we need tax reform and we have the most arcane.
Tax system probably in a world.
You know tax code is a 160000.
Pages long and that's ridiculous I agree that tax reform is sorely needed.
But we also need entitlement reform I -- is no question that's a ticking time bomb that nobody wants that really talk about.
And and so it's it's a -- it's a little bit about -- both of those.
And you need long term I we never felt that they had enough time between the election.
And the end of the year to really do all of that now so our best guess even now is that they'll do something stopgap.
And then come back and deal with a -- you next congress.
-- -- can happen you I was making this point to John fund in the break I said.
If congress was working for me if they were my employees -- fire everyone of them current historic speech get rid of the -- -- Look I can't imagine this scene go in this country -- that goes one year without a budget.
We -- without a budget for three years and it's all about the day today no one's talking about where are we going.
Entitlements are 60% of the budget.
And a lot of these entitlements Medicare is not that old it's only been around since 1965.
Where is it going to be in 2030 years where are we taking the country why this obsession on increasing taxes.
You know 1% that they did the infamous 1% pay 26% of the taxes.
20% the top forty certain percent pay 70% of taxes that we don't have a taxing problem and why should we continue to tax Americans now so that.
Government can continue to dean you know inefficient and wasteful.
I think -- taxing problem we have is about half Americans don't pay taxes.
That's the problem when I had -- the earned income tax credit -- is a very big program indeed and that's our.