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Citigroup U.S. Economist Steven Wieting on government spending’s impact on the economic outlook.
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Joining us now after.
Well take a look at whether or not these stocks are likely to go higher and how.
And just how soon prosperity will return Citigroup US economist Steven Wieting and I don't mean to put too much pressure on you and but we will.
-- let let's turn to first today's remarkable performance I mean this is moment to for all of us to -- Well the economy has handled the fiscal tightening large tax increases at the beginning of the year.
And it's held in stronger than we would've balked at the start of the year.
I'm spending cuts or actually small relative to tax increases are struggling here everybody better but so many people -- particularly in our crack.
That is.
Television news.
And other business press.
You talk about 85 billion dollars and the impact in the news too much bigger percentages the real factor in in outlay is is much smaller.
And and far more harmless than many suggest certainly the president -- suggest.
Why don't want to minimize the effect on individuals or particular programs.
-- the Congressional Budget Office has said that spending authority is one thing and spending cuts is another.
I and the amount to about 42 billion dollars.
If you look at well over 1% of the -- over the course of the next seven months or about a quarter of a percent of GDP.
On if this lasted ten years it's obviously not ideal would -- -- store very high unemployment.
For people who were unemployed it might become long term unemployed or unemployable.
Are there are lots of more optimal policies that we could hate about the deal with or fiscal problems in the next three decades.
But in terms of what would that be dealing with entitlement absolutely the one thing that we haven't done is to -- -- with long term structural spending reforms.
And you know we became a little bit more pessimistic on the lack of.
Action there.
You know CRI I I smile because I'm thinking.
President Obama is he is watching and listening to you.
Might be scratching handled witnesses.
He be saying we're -- what do you mean -- this was and I think the president has chosen not to submit a budget the senate has chosen not to put forward a budget.
The the president is chosen not to cut spending.
It's.
This week thing probably isn't.
Is well it is why it is we would like -- we to BP's -- Well you've got the wrong guy for politics I'm the guy -- -- told people who tells everybody that we've got a problem.
-- you know you look at the Medicare system.
And you know for thirty years roughly what stable demographics outlays were grown in excess of 9% per year but steady demographics.
You know and some of the spending has Sloan and its growth rate up but if you look at the population.
75 and older.
-- people where we'll you know a very low labor force participation rate because -- 75.
This is a population that in the coming decade will grow in excess of -- Percent -- -- we are you in fact the youngest OECD.
Country in terms of median age R&R.
Our age 65 and over that group of Americans were -- forty.
Million people to eighty million between now and 2030.
So the problems won't exacerbate themselves and as we're sitting here talking about the abstractions the realities and I'm sorry we're gonna bring up politics were because we're in the midst of sequester.
Which is as political as it gets.
-- looking at a continuing resolution which is again.
As political as it gets -- were involved in the political economy and if you can separate through January genius among men and I defer to you which I can't.
The fact of the matter is we've got to deal -- reality and I don't see this president doing so he is our leader for the next four years we have very very difficult.
Issues ahead of us we have -- highest cost of -- from a fiscal perspective -- India we CB member the IMF is estimating we'll get more fiscal worsening in Japan does in the next fifteen years if the good news.
-- is -- quoting me I am map because International Monetary Fund is a notoriously bad forecaster on just about everything to do with math or economics by country.
Are -- Greece perhaps.
The issue here is.
That we're talking about this -- because abstract words like entitlements.
What we're looking -- -- a contest between the young in this country.
And the over and how we're going to in fact distribute those resources and which we're going to invest in by the greatest market.
Right now it is by its no contest hands -- the older.
Come back we'll talk about how to do that right.
Maybe president -- all all this.
Recover well hey John Boehner to -- they received good to have you back but.
