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Oak cliff avoid -- debt ceiling deadline extended now the question remains can congress get a balanced budget costs.
-- -- Hoover Institute fellow.
Former chief economic advisor to president George W.
Bush has some ideas of what Washington needs to do before the -- debt deadline is upon us.
-- thank you for joining us.
So why is it won't should.
Congress do before that debt ceiling again comes upon -- some what's the likelihood that they will do it.
Well I'm not so sure that they should be focusing on the short run at all I think what they really should be doing -- thinking in terms of what are the things that they need to do to grow the economy.
You know if you look at the history of economic growth since the economy.
Got out of the recession formally got out of recession back in.
June of 2009.
We've had growth of about 2%.
-- long term growth rate in this country is about 3% so.
A recovery usually means that you're growing at rates.
That are better than the average.
In order to catch up we're not even growing at rates that are near the average so what congress and the president need to do I believe.
Is to focus primarily on those things that would get the growth rates.
Now I would put number one on the list.
Who focusing on the tax code and trying to create a tax structure that is pro investment rather than anti investment.
While what we're hearing from the administration is higher taxes more regulations bigger government spending right the Republicans on the other hand say that we need some big spending cuts we cannot continue to to spend money we don't have.
But then doesn't that leave this to the dilemma that Europe is facing right now way he'd need austerity but how'd you get economic growth of the same time.
Well again you know that's -- say if you look at the numbers and you know to not to be too technical about this that he is the president's numbers -- -- president Obama's predictions of where we're going to be.
In the long term average size of government relative to the economy is about 22 -- 1%.
The president is saying that within a couple of decades of things does go along as they currently are.
We will have an economy where we're having about 28%.
Going through government.
What that means is given the tax revenues that we have is that we will have to raise taxes on the average American -- -- talking about the rich have found about on the average American.
By about 50% in order to cover that.
A 50% tax increase on the average American is enormous and what it probably implies is putting in a very significant.
The AT at the federal level that's probably the only way to get there.
So either we're going to go to a completely European structure have very large -- taxes very large taxes and general.
War we're going to have to get those the growth and entitlements -- cuts that the growth in entitlements under control.
And so I think even if he is the president structure looks to me like almost all of the action has to be on the spending side.
-- at -- have.
Quickly let the Republicans are given in essentially on the tax hikes initially they were treated on the debt ceiling issue trying to tie -- to spending cuts.
Where does the GOP -- the line in this -- do you think.
Well I I'm not sure they're in a position to draw the line right now unfortunately I mean -- you know they control the house and the senate is controlled by the Democrats the White House's controlled by the Democrats.
So I don't know that they have a lot of power at this point to do very much I think what that what the GOP should be dealing again.
Is continuing the message that actually.
The challenger Romney had in the campaign which is that what we should be doing.
Is focusing on long term growth long term growth is the cure to most of our ills.
And if we continue to grow at 2%.
We are going to have problems that persist for the next that many many decades so.
We've got to get back to an environment where we have positive business investment.
The easiest way to do it by the way is still look at the tax side and -- we can still have a tax structure that's completely progressive.
But we have to continue to focus on.
Structures that will enhance the ability for -- For businesses to invest that's moving tax rates capital gains and dividends taxes from fifteen to 24%.
And taxing the rich is not a pro growth policy.
Have to leave it right that -- losing Ed thank you so much for joining us really appreciate it thank you thank you especially when the rich keep moving that's right.
All the golfers.
But I think every fifteen is we check the markets now -- open at least on the floor and gotten.
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