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Peter Morici explains how President Obama’s lack of pro-growth policies will drive more businesses overseas this year.
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Me now is economist from University of Maryland our friend Peter Morrissey and Peter.
Let's start with this deal -- they did this past week.
Whatever you wanna call -- What's that what's the -- there's a political impact but the economic impact is what I -- -- get from you.
Well on the demand side it doesn't affect the economy much because they they raise taxes which attracts but they also spent -- much more money.
So it's -- wash.
But on the supply side it's a terrible tax on capital formation.
You know a lot of those taxes effect small businesses would -- paying very high taxes they don't pay those Mitt Romney Warren Buffett rates.
And so they'll just invest less they'll be fewer jobs created.
It's a real negative especially when UN and Obama caring and -- and all the in additional business regulations.
These small organizations can handle this.
Well you -- -- last time we talked I believe you weren't all that thrilled about any great robust growth in the economy anyway so.
What kind of level kind of numbers -- you looking at as far as the economy for 2013.
The 2% during last it not very robust at all.
Business investment majority pretty well depressed coming into this -- fiscal clip discussion.
And everybody saying -- certainty.
Is what they -- while they -- certainty now higher taxes more regulation and obamacare mandates.
Witness will certainly do is encourage more businesses.
To locate activities in Asia where there are pro growth policies and they don't labor under the yoke of a President Obama who wants to change their country.
In all the ways that have failed and other places.
When when you put your economic metrics on on chart though Peter.
One thing that I don't know how you measured or if you can't measure it.
Is the question of what a lot of businesses have already gone into the what I call the bunker mentality.
Waiting to see what they were going to do it now that they've done what they did.
Now we got another month to two months of more waiting for.
Farm bill debt ceiling limitation sequestration all these things still have to be resolved.
Can you continue measurement what going -- with people -- severe basically go you know pulling their arms and I'm not gonna do anything until those people decide what the rules are.
-- I think folks have determined what the rules are going to be now you know President Obama in the last week of the campaign said to his base.
Voting is the best revenge and we've just had his first active retribution on the successful.
Entrepreneur -- people who -- Money to put it -- they know the rules.
Things are bad and they're going to get worse so I don't think there's anything about this uncertainty.
You know chatter that makes any sense to me or we need to know the roles.
We do know the rules basically the Republicans.
-- reelected to the house who was supposed to be that line of defense elected confederate army backpedaling.
Debts to Atlanta and the question is -- -- Obama's forces get -- burn the place to the ground.
Well.
So you're saying we don't know what the specifics are but we know that they're not gonna be good for the economy that -- -- the president has already said he wants more taxes yet again.
That -- happy today any spending cuts there has to be tax increases to go let them basically they gave them a free one.
You know President Obama face down speaker Boehner the most constructive thing the Republicans could do today.
In the house would be to get -- a leader.
Because when the pro Bono but when speaker -- Alford President -- 800 billion dollars and he said and he's it would like get for this and the president said you get nothing.
That -- told them that it was time to -- over the cliff because of they'd gone over the cliff -- the president would be negotiating tax cuts with them not against them.
So what your stated -- that he once more taxes.
How much more taxes can the economy hold because historically it's always been what eighteen and 40% of GDP were above that now.
Well it also depends on what you get for your taxes we have a terribly inefficient and corrupt government again -- perfectly good example to back that up.
You don't folks don't realize this but going into Obama -- the government already paid.
55%.
Of all health care costs so it was the majority owner of the health care system.
Well the United States spends on health care about 18% of GD -- The British spend nine.
The Germans spent twelve.
By every available metric.
The Germans have -- better health care system whom we do that 15% of the cost.
So you know to -- the amount the taxes we pay but what do we get for them.
You know basically yeah -- giant welfare program surrounded by a deteriorating -- Well at some point though -- -- that's why taxes never get too high because at some point people start changing their behavior.
And again.
Washington doesn't seem discourse that way they scored very static -- instead of dynamically about what will people do.
But actually they -- dynamically they make ridiculous assumptions and their budgets about future growth.
So that they did deleterious consequences of these taxes you know go one scored in their planning -- I guess you're right.
That they do look to the future but they do it it in it in an unfortunate way.
-- I'm afraid that we're going to have to go through -- very bad time and they just hope is enough to retrieve the country.
But right now we are pursuing policies the kinds of policies.
That -- civilizations to fail.
It's that simple.
I want to say we're gonna be another grease in five years but we could certainly be another Italy.
We can print our own money and people say well gee -- we can't go bankrupt but look what's going on right now right as I speak the Federal Reserve is printing money.
To by over half of the new debt issued by the United States each year -- already running the printing presses to pay for the majority of our deficit.
-- that's an absurd situation.
You know I'd like to know what they -- -- all those real barrels from the Weimar republic.
Yeah but but but I was taught in economics classes that.
That sort of activity leads to inflation and I've been waiting for the inflation and waiting for the inflation at all use.
But you know what colleague in the economic world Paul -- of New York Times opinion guy says.
No there won't be inflation -- -- has the economy stays depressed so I guess should we be rooting for the economy to stay depressed.
Where he is right most folks don't understand the quantity theory of money it's one of those burdensome thing you have to get in the second or third year graduate school.
But the reality is is that money drives inflation when you're -- full employment because it's more money chasing fewer goods.
We're printing more money now.
But it's leaving the country a lot of it goes to China.
And but inflation is not the only problem that we had.
This other ways you can suffer from this kind of situation the loss of confidence.
Is causing American multinational corporations is simply not invest as they should in the United States.
But invest in China because there is robust demand -- -- government which I don't particularly like.
-- from the point of view of its view of human rights -- personal liberty but is very much oriented towards growth.
The reality is America's juxtapose vis a vis China much the way the west was.
Vis a vis Germany and Italy in the thirties.
But this president whether it's growth or defense or foreign policy.
Is simply blind to facts and deaf to reason -- right.
