You're watching...
Former CBO Director Douglas Holtz-Eakin on the potential consequences of the fiscal cliff for the economy and Americans across the country.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
-- and spending cuts.
As we head off the cliff what can you and your family expect come January 2 Doug Holtz -- former CBO director and president of the American.
Action formed joins me now that it's always great to have you here thank you so windows narrowing.
What we expect -- Well if we literally go on auto pilot they failed to change course some I'm very worried about the outlook for the economy -- going to have some.
Sharp equity market -- attractions we're gonna have a big decline in consumer confidence is already begun.
There will be lots and lots of notices sent out for layoffs that'll scare people to death and you know this is not a good news story for anyone who's now looking for job and -- been struggling for the past couple years.
And then o'clock just keeps on taken as we're showing -- right now -- -- -- -- Cover the New York Post screening and -- using off the fiscal cliff this fall is really gonna hurt.
I I think everybody can relate to that went woman jumping off a cliff into the water.
Let's break it down -- for taxpayers are gonna see 500 billion dollar increase.
In taxes.
How -- second -- -- people how meaningful is it going to be are they gonna see the results -- their first paycheck.
Well for short we're going to have the higher taxes the came with a Health Care Reform for high income people that means.
Three point 8% on the net investment in common point 9% -- their payroll.
For every American -- 2.2 percent on every medical device except -- glasses contacts and hearing insult those taxes are happening.
The payroll tax holiday will go away almost certainly that means your -- small right.
And then there's the AMT if it and it -- your first one -- -- rate here first paycheck is gonna be smaller in the near right.
No question.
And they will try as hard as possible to avoid that first paycheck for the alternative minimum tax and for the bush tax cuts but there's no guarantee the -- to keep that up for very long so.
This is a story where that the checks get smaller -- and the economy gets weaker very quickly.
People have -- impact right away.
You know we'll talk about entitlement program is and the impact on them Social Security is is gonna have a deficit this year fifty billion dollars yet again here we go.
Can keep up with Social Security.
What's so longer term impact of what's going on on -- Programs.
The longer term impact impact is that we really do need to have a deal on the big problem which is that the national debt which is larger than the economy which is driven.
By broken entitlement spending programs.
So securities running a deficit right now Medicare has a huge deficit 300 billion dollars every year of 101000 beneficiaries every day.
-- Medicaid is basically deficit finance right now those are key parts of this social safety net -- a fall on their own financial weight.
And -- their fix which is what we ought to do on behalf of seniors right we really is due on behalf of the next generation.
-- looks like about the debt ceiling.
Now we just the president one point two trillion in more money back in February not happy with that.
They want to raise the debt ceiling again is a matter of fact by Monday.
They're gonna be at a -- I mean -- is unconscionable to me that we are in this situation again let's just remember what happened last time.
The market sold off the economy went into the tank.
-- happen all over again.
Well I.
Think it's a very very serious possibility and so I really would like to make sure that they don't -- the debt ceiling in with the fiscal cliff we need to get to next year.
We're out of self inflicted recession.
Then take on the debt ceiling which is a symptom of the national debt.
If we can deal of the national that we can get a deal on the debt ceiling but that's a lot of work.
So -- -- the war -- words it's going on isn't helping very much that's for darn sure you know we heard Harry Reid saying it's Republicans Walden.
And then that somebody from -- is off this said boy Harry Reid needs -- Talk less and legislate more or it's it's comical I mean it's simply comical up there what's going on -- -- -- I SM with dozens president too much but you know but the truth -- this mean.
There has to be a bargain struck and it is not not a good way to bargain to demonize the folks you're gonna sit at the table -- the president ran around the country barnstorming in pointing fingers -- Republicans.
Harry -- -- speaker Boehner that a dictator.
I'm the Republicans have thought that they're not -- that's it's time for one to put down the verbal warfare sit at a table on how to deal.
That spares the economy and the fallout of the fiscal -- What do you think it's gonna happen I mean and can only get anything has any meaning at all before the end of the year.
I would not get your hopes up for a big deal on the debt this is going to be a small package that gets us from here to next year without.
Too many tax increases some are going to be in there.
How -- that avoids the so called sequester the spending cuts that's the best thing that could happen at this point.
And you know I'm pretty optimistic person Jerry I mean I get up every morning thinking good things will happen.
But this is causing a drink governments out of my -- yet they're not.
I had you old glass half full kinda got.
I have and I -- your champagne glasses more than half full on new -- have a good thank you thank you so much good to see you.
