WWL>Topics>>12-4 12:10pm Garland speaks to Patrick Garofalo about fiscal debt

12-4 12:10pm Garland speaks to Patrick Garofalo about fiscal debt

Dec 4, 2012|

Garland speaks to Patrick Garofalo, Economic Policy Editor at Think Progress about fiscal debt.

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Automatically Generated Transcript (may not be 100% accurate)

-- -- Washington. We tried doing -- bush once we Goldwyn films Tribune review your world. -- on on the home. But these two books can get the building come aboard the and -- to our debt problems. That this is our most recent poll second. Then from poll indicates more Americans would blame. Congressional Republicans. Than -- Obama if negotiation skewed the country from falling all these so called fiscal clip. -- so Washington Post Pew Research Center survey. Released this morning. Indicates 49%. Of Americans predict the president and the Republicans in congress. Will not reach an agreement to prevent the -- spending cuts. And tax increases were taken and the end of the year. We have what does she would controller. Represented the liberal -- of in the except for the conservative side the -- Patrick. -- follow -- economic policy editor of think progress conference welcome to show. Adult what's your take on this at -- -- and talk more to what you see you -- -- the breakthroughs. Certainly no breakthrough. I think it's kind of hard to tell from the heat can grandstand at the moment what's going on. Behind closed doors in -- area right now publicly is we have aid. Plan on the table from the Obama administration we have. Parts of the plan on the table from the congressional Republicans but there's still at least publicly pretty far apart. But India might be closer behind closed doors oh no that doesn't mean later probably radically different. And and -- -- slumping not true deuces. Totally germane to be. Conversation but I -- little confused with a Alternative Minimum Tax. Exactly what is bad in is that part of this the verdict. The Alternative Minimum Tax it was a put in place for several years ago in an attempt to. Didn't get that people like Mitt Romney who is taxes are much lower than they should be on paper because they're able to take advantage. Loopholes and deductions and credits send money offshore -- to catch wealthy people. -- -- low -- -- and kind of say OK if you make a lot of money have to pay -- certain minimum tax straight. However congress in its infinite wisdom did not index the Alternative Minimum Tax -- inflation. So what ended up happening is that over the course of several years the minimum tax start catching a much wider group of people and it ever intended for and now if we were actually -- it happened. It would deter significantly into the middle class so what congress does instead of going back and taken everything into just. Accurate every year and -- what it called and they did say OK during the middle class you know precipitated things forget about it. Com. -- is part of the in fiscal cliff in the tenth of that. For budgetary reasons. And that what we call the current policy baseline which is. Baseline -- revenue that the Congressional Budget Office says were going to collect. I assumed that the Alternative Minimum Tax will happen and that it will hit a lot of middle class people. So. Mean you're looking at certain revenue prediction you have to take that into account and realized that the revenue they're talking about as the in terms of current policy includes planning a lot of the middle class with the Alternative Minimum Tax. And I think eventually there were. Talking about for a million people though there talking about almost thirty million people right. Right it's one of those things but unlike the so called toxic which is reimbursement to doctors that. Congress never permanently taken that they just every year come in and say oh no we don't want that thing actually take effect and -- -- the -- on the current. If you're Leno a -- Turkoglu -- a number of myths. That some publications are pulling her out there. -- -- and number warned fiscal -- is mainly about defense cuts expiration of the bush tax cuts. 500 billion depends -- two point seven trillion tax increases but there have been pulling out the Alternative Minimum Tax is also a problem. And more than two million American we lose -- federal unemployment benefits do you think Dutch -- -- public record and that's the bush tax cuts to get all the headlines. But there -- several worrisome part of this package and you didn't -- the one that worried me the most urgent that the payroll tax cut that we had in place for several years. Which is meant -- to boost middle class thing count them and make it to the middle class and low income families have a workers have a little bit more money in their pocket. That's supposed to expire at the end of the year. And that in terms of an immediate hit the economy is much bigger than the bush -- a couple of the spending cuts the bush tax cut and the spending cuts. Well still training you'll still in effect over time you know there's withholding -- contact. And spending cuts to happen as agencies worked in the course of the year the payroll tax cut happened immediately from one paycheck to the next do you see a chunk of money gone. So that it actually to me the most concerning part of this package and we're paying very little attention to it. All right -- let's take a break here. We're thinking about the the debt deadline and that everybody's been talking about for the last few months and Washington. And we've gone to whenever experts are long Patrick inaugural follow. Economic policies don't turn their progress. Bank you have -- 2601. Itself. 77. Texas. But we're a very good about fear that -- -- More secure and -- your. Democratic. -- We're had pretty -- follow with the economic policy editor at think pro or. Africa a -- continue with some of the yeah. Listings and I've seen that are called myths. Of the -- Dublin that we keep hearing. Number two the -- it is it's okay to pull them through school clip for another year and a road Paul Krugman. -- think last week where he basically said the same thing go ahead let's quote the clips like going to be that bad. But this says in this from Washington Post. These loans without putting in place of beginning of the deficit reduction plan. We're seeing the dangerous signal to global markets businesses the American public. But Washington is not serious. But fiscal responsibility. And we can't -- Moody's investment service Standard and Poor's Fitch ratings have sent. Buena and it's his to lose its triple a credit rating or please further downgrades. In the case of -- some pretty fortieth. That the -- and I didn't more in the former camp and the latter I'm not too worried about patent. And grades so our market rattling I -- keep seeing what happened in the last several years. Credit rating was downgraded by one of the credit rating agency last year it meant precisely nothing. -- we don't have a record low rates for our our treasuries. Comes some not too worried about that. I I think there is something to be -- an -- if we do go over the fiscal cliff most of the items due to take some time. In Q com take effect as we are talking about before being -- it won't necessarily be felt immediately. -- spending cuts are phased in over time so act deemed. Many economists don't -- think most feel like there is some wiggle room that he has. Ten days a few weeks maybe even a couple of months in which you could go back and catch the part that you want to -- The danger becomes in letting the whole thing happened. And not taking any of it in which case you have a huge essentially austerity package in -- cleaning your posterity just doesn't work out too well. That they were to leave the whole thing in place that would be worried I hate to agree with those who say that. There is a bit of wiggle room that once -- going over does not mean catastrophe. It's not necessarily if fiscal split its. Looked -- excuse me it's more of a fiscal slope took. Typical downhill. -- stroll entered some time on the campaign. Broke bad -- where he was spoken about pulling your role in kicking the can down the road -- -- -- Of their of their third minute to score over the fiscal cliff would not immediately damaging the economy beautiful people and the Congressional Budget Office something cute -- you know exactly -- scare mongering telling there's CBO projects that the fiscal -- Would cause the economy to shrink by nearly 4%. In the first quarter of next year. Enough to cause usually a double dip recession. And I disagree. Not I don't think it'll we get him back and Spain and England took their time to -- -- but there's not a ton of time anyone wanna let the whole thing. Spain -- -- -- that contraction of the architect. Objects are not going to happen in the first week of January in the first two weeks of January that's what happens if you leave. Holman and played forced several months he'll start to see that effect. I'm not that does mean that in the first didn't happen in January maybe even all the way through January. You do you have some time to play with because you think you take a little time to protect its systems. Deal when the they're claims Smith scored more than two school clip we'll make it easier particular grand bargain on debt reduction that think that would prove moves talk about. What is article -- Washington Post. So is it completely missing Georgia's how bad the blame game would be at that point politicians. Might think they would work it out quickly. But that's a dangerous gamble. Yeah I kind of learned in doing this. Jobs sure these certainly years that I have that kind against what there actually is pretty hard and -- and however if you look at if you look at the -- political perspective. And Democrats rightfully so feel that they have the leverage. On January 2 because after all. And they want to increase taxes on and that's not to text brackets and on January 2 that -- It's done it's over and I'll let President Obama signed in July -- that doesn't go away. That's what they want to happen then of course they have every incentive to let it go over and then come back and -- Clinton didn't deem appropriate -- -- over over the years will there be a liberal. Congressman senator or conservative congressman senator. When when that's eluded them. -- -- up talk to the other congressmen and senators have 2030 years ago that are most of which are -- a lot it is. -- -- -- -- That -- yeah we used to that compromise all the time that was name of the game. When when he goes to the movie Lincoln. It was very much about behind the scenes compromised. But to -- The cowards would be Tellme very proudly. Well. Where we have a platform. We have a belief system and and denigrating met many former fashion just negates. What we say we stand for. And if that resolve who's carried through what are -- C -- -- in game and that if both clubs say. We stand for what's right and we will not compromise. Worked out where we go from there. -- get to go to filibuster reform right. Yeah. -- it's just. I mean that's much more of them economic discussion that the question of the institution that we have in -- can do we have it proper institutions in place for me. Polarized political system where there is no. Compromise -- -- they're very rigid partisan lines of the Palestinian but the people you -- talking cute. From decades ago. -- it was much more likely to have kind of liberal Republicans from the northeast at home more conservative Democrats from the south and other parts of the country and so. Party lines aren't quite as a rigid -- you got these compromises that weren't in compromises that they -- and because that. Party line was much more -- This is good article from New York time in -- asserted that. I -- because it was kind of directly contradicting. -- -- Bernanke that were born of the you know Sunday talk shows the good news shows. This frontpage -- or talent. And the demands from the Republicans the President Obama propose. Detailed -- spending cuts revert the fiscal crisis. His answer boils down to give us your first. The president and scored bug failed negotiations and his first on emboldened by clear and closed selection to a second term. Has emerged in different kind of negotiator over the last two weeks these discipline. Unyielding. And will not give an inch. Is that what she received from this president in the -- that goes back to what I am talking about that she grew in influence maintain where -- we go from there. Yeah I think that's absolutely right and I can think of Dayton having gone through what you went through President Obama really didn't have much of the children what we saw through his first term. Whether the stimulus whether it's health care whether mr. frank whether there's any of those things other things that they did. He would propose what he structured. Routine that kind of middle ground. Him till he would say OK I'm going to concede things up front in the hopes that the Republicans will think in keeping them all be happy get along and think from my. And that didn't happen so what he's doing now is coming up and saying look. I want my tax plan and I want these spending cuts and if you want entitlement cuts and I'm not going to be killed them for you. You have to do you tell them yourself Republican -- I have played this political game that's quite brilliant in wish they'd demand entitlement content but then demand that Obama. Provide them with the entitlement that they did -- we want entitlement cuts and we want you to provide specifics. Well entitlement cuts aren't very popular people don't like cutting Medicare and Social Security so. -- that the Republicans want they want the Democrats -- -- for because they're unpopular. And Obama theme and dynamic play over again and again and again -- -- first term and that now if you want these politically unpopular things. Another thing I won't do that and I'm just saying you have to have proposed them first he's not going to negotiate with himself. In that went -- and I think given the way the Republicans and -- over the last four years that was really the only appropriate thing to do. During during value when it took over the first shown them in the show bumpers on a home when I had a -- muscle and assumed -- columnist was -- consumers engineering you know everybody admitted they were the same way and as soon found out and they're conservative economists in the liberal economist. Pulled what they. I've had them all agree on over the years. Is that Medicare Medicaid Social Security is unsustainable. It's I've got to be -- -- changes it's either going to be. Some sort of funding cuts. Democrat as a liberal. Do you see that those programs have to be changed and some former question. I mean it's certainly true that if you sit around and did not seen that in you know open -- Several decades that they would be a catastrophe in particular that he didn't take the entire federal budget. However the extent are actually pretty simple I mean on Social Security -- exceedingly simple. Com. And so I think they get blown out of proportion that's certainly true that if he did nothing and then you have a huge problem but. Indeed something that you have to do is not all that large and it's not content to the scale of the blue -- -- -- about the. A new nor read very very conservatives labour and -- hear the show when I say you know well we ought to move that leaves on Social Security up a couple of years we'll be bringing -- -- to -- -- now. You are you still get a live blunder pure a couple of years down the road do you know it to do you have to wait a while longer. Holy Toledo. Why can't I had I don't seek to -- responsible or -- -- that. Age is problematic first several reasons that had the largest being. That yes there has been an increase in life expectancy over the last several decades which is usually the reason given that it's okay secretary of -- retirement age. However that increase your life expectancy is almost entirely concentrated. Among breached non Emanuel laboring people. And so while it is true that a lawyer is working -- -- into living longer convenient -- editors and construction workers then didn't even people who don't make it much money are not so I can have a little problem with asking. Standard retire later because the lawyers living longer and. Patrick in pursuing an interview. And back to Leonard David thank you -- -- time during any time. Patrick you're Apollo economic policy -- -- progress. Liberal organization come rub or you're the conservative side -- your -- Heritage Foundation stay with us WW.