It would be disastrous to raise taxes, but the government should let the automatic spending cuts kick in, says Stephen Moore, a Wall Street Journal editorial board member.
Automatic spending reductions and tax increases (the fiscal cliff) are slated to kick in Jan. 1 if Congress and the White House don’t act.
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On the fiscal cliff, there are really two issues,” Moore tells Newsmax TV. “There is the issue about whether we are going to raise these tax rates, which I think would be a catastrophe for the economy. The other side of the equation is all of these automatic spending cuts that are supposed to happen in January, and you know what? I actually think those would be a good idea. I think that would good for the economy to see some cuts in spending.”
His view on spending cuts puts Moore at odds with many Republicans in Congress who want to spare the Defense Department from any budget-cutting.
And why would tax hikes be so harmful to the economy?
“This is an economy that is very fragile right now. The recovery seems like its losing steam,” Moore says. “I can’t imagine a dumber idea than loading all of these taxes on investment. Business investment is the sector that leads to a growing economy in the future.”
Business investment has been negative in the last nine months, he says. “Why in the world would you want to raise taxes on investment?” That could push the economy back into recession.
Moore thinks Republicans will wisely “take a very principled position that these tax rate increases on the rich that Barack Obama is talking about would be very negative for the economy, very anti-business and would cost the economy jobs.” To be sure, Moore says he is a bit concerned that Republicans will cave on the issue.
The last four years have been terrible for the economy, he says. “We should be in a very robust cycle of growth right now. It never happened under Obama. He says, ‘I’ve averted a Great Depression.’ I think his policies are leading us down that course.” The solution would be for the president to do exactly the opposite of everything he’s done so far, Moore says.
He opposes the Federal Reserve’s quantitative easing, which consists of buying Treasury and mortgage-backed securities to keep interest rates low and boost the economy.
“This has been an unprecedented experiment in very expansive monetary policy, where they just have the printing presses on overdrive,” Moore says.
“The left hand of the government, the Treasury, is issuing the debt, and the right hand of the government, the Fed, is buying the debt,” Moore says. “Where does the Federal Reserve get the money to buy the debt? Of course, they print it.” That’s a recipe for disaster, he says.
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