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IHS Chief Economist Nariman Behravesh on the debate over the debt ceiling.
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All right before we get to this debt -- -- -- lets you know California apparently overestimated how much tax revenue they'd get from the FaceBook IPO they overestimated by six untreated.
Million dollars you can hear Jerry Brown going off doing -- Homer Simpson.
But it brings up the issue can you trust government to get the numbers right here -- the fight over the debt ceiling is in full force.
Today Democrats proposed a bill to eliminate it completely and Fitch ratings has come out with two scenarios and we -- it would downgrade.
The US credit rating not good news some Republicans are now acknowledging.
The debt ceiling does indeed.
Have to be raised joining us now is an air mass bigger -- I HS chief economist and we appreciate your being here.
Is this.
Fight we're about to have necessary and what's going to happen to whether it's global markets my 401K.
What's gonna happen all of us if congress has this.
Well this is not a necessary fight in this this situation has been created by congress.
Which set the debt ceiling some years ago in the hopes that it would impose some kind of discipline.
But of course it happened because it's been raised and raised and raise them now.
It's a source about a contentious debate but it's still raise.
And so it's it's unnecessary and and what's what we need to do in the US.
Is for the two sides to get together come up with a comprehensive debt and deficit reduction plan.
The debt ceiling and all the -- off all around that doesn't really solve the problem.
So let me ask you don't have it's a little time let let me -- didn't waste of time let me interrupt you because.
I think we've had this debt ceiling essentially part of our discussion promised -- -- goes back to 1917.
With the issue of liberty bonds.
But now today when we talk about the debt ceiling and we talk about its impact this debate.
For the people who are watching every time that we get into this craziness I that we we -- markets react in ways that you can't anticipate.
What would happened to our 401 -- if if congress.
You said they need to get together I was thinking two words good luck.
What happens if they don't do something.
Well it's a question what is the something which document if they don't raise the debt ceiling.
And let's say we get debt downgrades and the markets have -- basically a time and drop as they didn't summer 2000 -- All our investments are gonna get hit the stock market's gonna go down as it did in in a big way in the summer 2000 allotment.
On the other hand that if they extend the you know they raise the limits -- the -- what the ceiling limit and do something more.
You know maybe not a grand grand compromise -- something more.
In terms of deficit reduction my guess is the market so kind of shrug it off.
The markets won't get upset says so so that they -- the issue is I think in the end what happens.
In the run up you know they'll probably go right down the wire mean will the markets react as we're -- down the wire.
Because they'll do something been active in the fall the US won't default on -- that I think what a lot of parts of -- on I'll tell you -- that.
-- so you've got the billionaire Coke Brothers are urging the GOP not this issue.
You've got all kinds of GOP senator Susan Collins actually saying we we need not have this fight.
Would it be better for the Republican since the issue is spending we all agree it's spending spending spending.
Wait till march today as Susan Garrity our producer in Washington calls it doesn't make clear -- the son of fiscal clip.
Wait till the continuing resolution and then say to the president okay.
You want to fund spending we funded it but you said it was about cutting spending so let's not do this continuing resolution give us a budget that cuts would not be the better argument.
Well I mean there are -- I think I think the issue is this a net figure right in saying that.
We have to deal on the spending side as well as the tax side we -- -- what my preference would be as comprehensive.
Up entitlement reform comprehensive tax reform as part of the deal.
Instead of these you know to -- kick the can down the road two months have another fights.
Okay do -- temporary fix do it again and this is crazy this is not the way to run a government.
So in that sense we've got to.
Major credibility problem in terms are politicians.
As a -- -- when you said this is not a way to run a government there was a collective amen across the viewership thank you very much have a good evening when.
-- coming up on money.
