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The Heritage Foundation’s William Beach on the fiscal cliff negotiations and how potential tax hikes would impact the economy.
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On the last ditch talks to avoid the fiscal cliff.
I'm joined by Heritage Foundation budget experts and data analyst director filled beach insert.
There isn't and call it conspiracy theory that there that in actuality both sides really want us to go over the cliff.
Because then they can restore spending cuts and they can enact tax cuts for at least some of us is do you think there's any credibility that.
Who in May be more than a conspiracy -- just look other -- -- look like they're both wanted to go over the cliff.
You know in some respects is kind of an interest staying -- fact.
Going over the cliff would definitely push equities down I I can't imagine would do anything other than math.
But that of course makes bond stronger and it makes the interest rates that the treasury pays on its notes.
-- so wouldn't it there's kind of a funny silver lining for the short term for the federal government plus for the short term first three months about having guests.
Well the economy slides into a lower level of economic activity perhaps recession that would be higher revenues.
So that kind of makes it easier to handle you know the debt ceiling issues coming out but -- -- -- -- come.
What I'm calling from over -- a year ago was the CBO report that says unemployment goes to nine point plus percent.
If we go over the cliff how that there is no way to avoid paying we're either gonna have tax.
Increases that will stifle economic growth that's what everyone says the president said -- two years ago but yet we're going to raise taxes or we're going to have spending cuts that put people out of work and raise the unemployment rate to nine point.
Whatever percent.
Whether we have a -- -- not so why are we wasting all this time.
Well -- it's important not to make things that much worse we cut out -- over the cliff in November when we ran out of time to do something really good.
Now we're definitely out of time you know they have to get a bill basically into the senate by this evening in order to avoid the rules that -- has to lay over three days.
They have to suspend the rules that they bring the bill in tomorrow.
Which means that anyone centric -- basically screw this deal -- So that they need to get it done now or the need to get it done the first couple weeks in January because.
I mean obviously everyone's going to be making.
Different kinds of economic plans for the first half of 2013.
Particularly.
On the dividend side you know overall the stock about the income tax rates -- -- dividend rate didn't end the cap gains rates are the really sensitive economic rates we really need to focus on those.
The damage to the economy if those rates go up will be substantial and long lasting.
We had an economist on -- Fox Business as -- today who said that the worst part of the fiscal cliff.
Are the tax increases because it does stifle economic growth for this meeting at the White House is this offer showed they already have a deal -- or is it just to save face because there is no deal and they know we're going over.
There there's no deal right now the deal would be made by Mitch McConnell he's the deal maker for the house in this -- on these fiscal issues.
While he talked last night like he had -- he had an offer from the president that was thoroughly denied by everybody this this morning.
My guess is that this is for show.
If there is a deal you'll hear about it 7 o'clock 8 o'clock this evening -- legislation has popped on to both the the clerk's office said in the in the in this senate.
Hopefully getting it up before midnight so that they can.
Pass in -- order.
You know what they ought to do they not take the -- -- -- already been passed by the house the censure should amend those past those back to -- -- to the house today or tomorrow.
And then get get that business taking care of those are pretty good bills and they could be amended that we've not seen any action from the -- -- four.
Well you're -- -- -- I think -- 310 million Americans who would say you know what they ought to do they ought to throw the lot into the Potomac.
We -- your data whether they'll be from The Heritage Foundation happy new year served save you.
