You're watching...
Former Reagan economic advisor Art Laffer on the latest battle of government spending and the debt ceiling.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Voting President Obama to use the fourteenth amendment bypass congress just go over that debt ceiling.
Forget about congress in other words congress wants to give the in other -- the president wants a blank check without congressional approval.
Joining us now is aren't locked up how -- -- to President Reagan.
How are always a pleasure to have you with his -- -- -- -- I'm gonna say with heavy pressure from Nancy Pelosi and other very senior Democrats.
This is an option that the president may well take what do you say.
I hope he doesn't I can't imagine he would do it because it really -- disrupted with the whole process but I'm not a legal expert I don't know whether it's right or not.
But frankly it's been not used for years and years and years and years and years.
And I don't see why we should break tradition now and try some new circumvent -- that would put -- us trust into the process down just just doesn't make sense to me.
Just thinking what kind of a message you would send -- markets and investors around the world will not prepared to get a handle on -- spending that's what it would -- Yeah and if it's correctly.
Stewart if it's correct I mean why don't they do it during some time when it's not a crisis.
I mean that's when you test the -- to see whether it's correct or not so it can be used in the future not at the moment of crisis management that's the wrong time to check and whether it's legal or not.
Okay now that there's some people are saying look the worst is a -- for -- debt.
In a few years' time.
Our debt will stop rising as a proportion of our economy and that means would basically stabilizing -- going to be okay.
What -- sort of -- Well I hope that's true because that means that economic growth will pick up dramatically.
And that will bring tax receipts -- way up and it will also bring spending way down as you get people off food stamps off welfare off unemployment remained at.
That's form of welfare is still a good high paying job and you believe it looking.
Didn't I don't I don't think it's true right now no I don't think -- -- policies will do it okay but not.
Now obviously not because Def as a proportion becoming just keeps on -- -- -- -- got bigger.
And the deficit doesn't seem to getting really teeny tiny either doesn't -- Stewart doesn't get the note does not cost -- three and a half billion next -- every single day.
There's no -- tell me how it actually affects our economic growth right how to do.
Well right now we have -- -- low low low low interest rates it doesn't increase the use of -- Of tax receipts to pay interest on the debt.
But as interest rates rise which they well it will have an enormously deleterious effect on growth rates.
I mean it really well and and that's what we're really worried about -- the long run prospects of what this national debt and thereby tax receipts used to pay interest.
Will do to overall economic growth and -- heard of a lot.
OK I want to move onto a different subject is -- -- new report from congress insists climate change is -- it is you can watch out it is effectiveness and -- because we humans.
All our economic activity.
The report was written by 240 business leaders and scientists that found -- climate change is having an impact on infrastructure water supplies crop -- lines.
-- this surely is a build up its softening is up to the point well we will accept a carbon tax is not -- It it could well be but let me just say -- -- not an expert on global warming I consider myself a fairly good friend of Al Gore's.
And he is very convinced the global warming and I just don't really know I'm not a scientist in that area.
But if it is a problem and if it is caused by humans and if we can change it.
You know I would be in favor of a carbon tax if it were 100%.
Offset by a progressive income tax rate reduction.
My problem with the carbon taxes that destroys economic growth if not offset by am worst tax rate reduction this model that's what I'd like the secret.
I could I'm with you but there is absolutely no way that we get a common tax and simultaneously.
Tax rates come down there's no well it -- -- the most amazing thing to me it's doing a little bit of research on the economics of a carbon tax.
Every time Al Gore has mentioned a carbon tax increase -- has.
He is also mentioned simultaneously.
A payroll tax rate reduction.
That would exactly offset that tax increase which I was sort of amazed at doing that he is never miss them that opportunity.
And all of us out of carbon tax or re worried about the damage it'll do -- the economy.
That's where I'm worried and so therefore if they could do an income tax rate reduction I would be fully.
Go along go along with them with a small carbon tax.
But.
If they don't do that I'm totally opposed to any carbon tax whatsoever that's not offset.
By -- more damaging tax cut.
You know all we didn't know that you -- a friend of Al ghoul who just this very nice -- by the way and eastern neighbor might just on the street night.
I see it fairly frequently in -- Is that how the need guide to be a -- why did -- say hello news network to Al-Jazeera backed up by big oil and at the because they've got paid up a hundred billion dollars and -- -- Because that's notes of rockets -- because alcohol anybody Goldberg said.
A big Powell -- spoil but he loves oil money and I think it has captions they -- nutshell what can I tell you you know you got all sorts of things you've got.
Howard Metzenbaum moving to flow order to avoid the Ohio State tax would be with the chip in his that you got John Kerry Biden -- -- in Rhode Island.
Stewart it happens all over the place but what candidate Al Gore is a good guy all right what we're gonna leave it right that okay -- -- a figure much indeed -- always my pleasure got you.
