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Rates in US history of less than five months away our next guest says in the bush tax cuts joining the company now is Steven Kyle a professor of economics that.
Cornell University now professor you want to end the tax cuts for everyone or just the rich.
Well good morning good morning.
-- I think there really are two big problems that we're looking at right now one short one.
One long run.
The short run is that we are in danger of sliding back into a double dip recession.
And for that I'd like to see a stimulus or jobs bill called what you will.
Put in place right now to counteract the negative stimulus we're getting at the state level and from abroad from European Japan -- For the long run problem we need to convince the markets and it doesn't seem that they're really in doubt right now with the ten year bond at two point 6%.
But in any case we need to convince the markets that we are serious about fiscal stability in the long run.
And just letting the tax cuts expire would do that easily.
Well you know not I'm sorry professor but I I think it's the exact opposite I think the markets are fallen apart because they anticipate this gigantic tax increase just in the middle of a recession that doesn't doesn't wanna go -- I'll falling apart you call two point 6% on the ten year bond fallen apart I'm talking about I was literally a million people -- -- -- -- apart about forty million people of foods that have fallen apart yet.
Yes sure because the economy is slowing down we lack demand that we need the government to provide that demand.
Because you sure it will no business investing now meanwhile president do you have a 100% further -- are more -- -- buying it there's it would -- -- the economy the -- it is.
This is is that 2.3 trillion dollars by the way the business to investment business to grow but a lot of -- is 10 lead breath don't let their -- -- -- -- pizzeria.
People are sitting on money what we're saying in this economy.
The lack of confidence and its administration because to your point they've already spent four trillion dollars and all we got four was allowed to teacher.
And the reason they're sitting on all that money is because there's no demand for their product why on earth would they go out and invest in new capacity when they are using what they already you have.
So that's boils down into the end user that consumer who was sitting on tons of money we see savings rate what are they afraid of what Americans there are very afraid of the general economic situation completely going downhill also my heartbreak hill that is usually go to rebuilding their personal balance sheet.
Household debt got two all time highs in the not very distant past.
And that still at a high level until they're rebuilding Charlton and I didn't give me let me get a tax cut they're gonna save it they don't let me recently united -- Let me ask our -- -- simple question.
Matches are -- in favor or not in favor of extending the tax cuts.
I'm not in favor of extending the and that applies to -- the middle class and the wealthy tax -- let them all expire my urine is that this situation was not broken in the year 2000.
They should not have passed the massive tax cuts at that time and letting them expire which again is just what was planned in the first place.
Would be the best thing to do for our -- -- -- of your argument is that aggregate demand needs to be race.
Absolutely would doubt -- -- aggregate demand raised by tax cuts.
Old tax cuts are the worst way.
To raise aggregate demand which is why I'm proposing a massive stimulus in addition to the -- guy knows how that it has spent their money their images -- -- -- so to speak.
You give -- -- tax cut sure they'll spend it but they're not at the end of their -- right now they're looking for cover so you -- a tax cut you're not gonna get out of my.
And and the Congressional Budget Office.
Seems to agree with the lesser -- we're talking about -- for today saving it.
Thousands and millions of them milk so called middle class families right now if you give -- a tax cut either good they pay their mortgage bill on time.
Let's go out and buy some new calls for their -- preschool this year as opposed to recycling last year.
I'm sure is -- -- be saving these tax cuts and got famous parents have dire straits right now.
Maybe any academic -- everyone's living comfortably but yeah main street people are struggling and a tax cut would be alternate way to stimulate this economy again.
And the people who are struggling the most of the ones who have no income to tax at all well yeah five million at a very low income tax credit -- -- jobs.
The people who have the jobs actually are way better often the people who are unemployed all to -- -- way.
And our fiscal situation back into balance is to get those people employed get about it.
-- played -- if anything with a way to Baghdad tax cuts for the wealthy because they're the ones that are employing these people out there you have the higher.
I unemployment increasing beat due to this -- -- tax cuts go away.
Oh please you really think that the rich people are the ones who are going to need the tax cuts the most and the ones who are going to.
Keep the economy afloat in most effectively when a -- guy looking most of -- affectionately as -- -- the most effective kind of the stimulus you can do.
If you give money to people who will spend it right away yeah I don't.
So yeah -- all of this high on the list there is unemployed people.
You want to give -- made the state governments because very Arnold Palmer president.
And the president -- -- -- -- -- have a lot of infrastructure that needs buildings.
But I'll tell you just yeah.
I don't know roads and I howling wind and by the way we heard this robot or what -- -- -- we heard this bill before about the rebuilding but you said something instead give money.
-- I think the way America comes back it's what people aren't in the environment where they can earn money.
Because when you get going if you're advocating redistribution of wealth -- -- I because I literally left for the wealthiest is ripping off but you and you got to punish them that -- and tell anybody would want another war in the last year and a half.
I entirely agree with that I -- I shouldn't -- give I should say give jobs let them earn money doing things that in fact really need to be done.
Our infrastructure is in -- seriously.
Dangerous state -- many parts we need to do that.
Why not do with stimulus from things that will increase productivity over the long I'm there I'm gonna today right now the thing that makes people feel basketball and I think we both agree that working but keeping more of the money that -- worked.
That has such a magical impact on the economy and what you wanna do is gonna have the exact up -- and its interest because.
Now now now -- now I want to give them jobs but the fact of the matter is you have to pay for what it's spent.
We are not doing that right now and although at the moment.
The bond market tells us that they're not worried about that.
Eventually that's not sustainable.
So we've got to fix that problem but my -- we're not going to cut spending which hasn't happened under either Republicans or Democrats for years.
Then we're gonna have to get the revenue that we need in order to pay our bills but the most effective way to do that if -- get everyone back working.
And two in my view them but -- sport restore long run -- professor -- letting the tax -- professor if that situation was not broken in the first place professor -- you acknowledge though that you were actually arguing abort keynesian line -- -- Obama administration.
Yes except for -- -- you or your going with what I would call -- classic Paul Krug man asked.
The government should really be in there helping people -- -- that is your -- you.
My point of view that is my point of view when we're in the conditions of the deep recession that we currently are in danger of returning to.
Perhaps not my point of view when we're in the middle of a boom but but right now -- -- but -- it but but the the good news for those of us who disagree is that there's probably.
Very little likelihood of your view actually holding -- -- Washington.
I don't see them arguing this point of view I see them arguing for a middle of the road.
-- -- Actually I think might be worse than either point of view.
In a more pure state.
I don't think that's the case president Lotta professors with a child having the difference between -- different from where you wanna be professor thank you very much -- really it's a great debate then if it.
We really want to have you on more often thank you very much glad.
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