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Univ. of Maryland Professor Peter Morici on the potential economic consequences of reaching the fiscal cliff.
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Gonna start to feel it quickly as talk more about it joining us now have more on the fiscal clip libraries.
Right -- -- this is at the University of Maryland and former chief economist for the US international trade commission.
I -- played out for us but just -- were going over the cliff what happens.
Well are we going over the -- are we bungee jumping that is always going over the cliff the good or -- president expect to increase oil -- together by.
January 15 ever go to our forgot what I just having a recession this CBO being what it is can't talk about how bad it will be.
If we raise taxes this much and don't do anything about it cut spending as much disputed -- -- -- -- anything about it.
That we are looking at a recession that takes unemployment into the teens at those kinds of levels it is difficult for the economy to recoup.
And recover.
-- -- Peter climb into the weeds here for us Peter gave us the update as to where we are looking at.
Sorry senator Reid now all the focus falls -- do you think he can craft a package that's gonna make any headway at all.
Well it's a very -- problem because there are moderate Republicans that might be inclined to vote for an extension of the bush tax cuts the way the president likes it.
That is on -- bunny comes about 250000.
Dollars simply to avoid going back -- districts.
And saying gee whiz you know I I didn't -- -- you know impose this big tax increase.
On doing so therefore -- had -- to compromise however the Tea Party -- don't want any part of that.
And that would put mr.
Boehner is -- -- -- in a vulnerable position and let's face it mr.
Boehner is worried about the country.
But -- most of all worried about this debate.
Right exactly.
-- you came -- letter announcing that we can go bungee jumping because I think at the end that's what it's what's gonna happen right.
And they're gonna make everything retroactive so what does that do go to the economy or at least of people's psyches for the first it could well be the first month of the year.
If it's a whole month it's not bungee jumping -- off the Clinton -- they have to have a deal insight.
Or people will start to change their behavior in -- -- they have less money to spend and if you think folks lacked confidence in Washington now.
If they cannot resolve this -- there's no resolution in sight.
Consumers won't have much confidence in Washington and investors may start getting shaky about US -- -- Peter what's your what's your time friend that sets us you know what do they have to they have a week into the new year to they had two weeks before all hell breaks loose.
It depends on whether within the first week they have the makings of a deal and it's a matter of just getting it through so by the fifteenth they've done.
If we get up -- the third and we are where we are now.
Then I suggest we have gone over the Clinton.
What you -- you mentioned shaking -- -- US bonds and you know yields are down again today Peter it's like there's no ma'am I'm from the market.
I mean I understand that the -- not hello I'm -- earlier run.
Entirely not getting a stronger message from the market.
So that Washington where the bond vigilantes you know to get Washington to act.
Us quite simply Europe look so bad where would you put the money.
The alternative deal isn't -- this for a year now there's no interest and wellness company US stocks are really the better return right now.
Well they are right now but if we go -- clip you might not want to repeat that statement.
That cash might be you know a lot of people are gonna have to move to -- if they really feel feel shaky about the US government.
-- but the goal that we might see a boom in gold.
FIF that million Barry in the backyard and it's -- -- just like French farmers.
A kitten being -- great thank you spare have a happy new year.
So funny happy -- -- friends say yeah happy new year.
