A Quote by Ben Bernanke
Under current law, on January 1, 2013, there's going to be a massive fiscal cliff of large spending cuts and tax increases.
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Much fiscal policy is implemented, not through spending increases, but through tax credits and other so-called tax expenditures. The markets should respond to them as they do spending cuts, with little contraction in economic activity.
It's going to be difficult to stimulate the real economy in the U.S. at a faster rate than 2 percent and perhaps even less if we have that fiscal cliff in December or January 2013.
Republicans must stop putting tax increases on the fiscal cliff negotiating table and start demanding that Democrats put forth serious proposals to reduce spending.
We did the two-year extension of Bush tax cuts in 2010. We negotiated the Budget Control Act in August of 2011 and the fiscal cliff deal at the end of 2012, which saved 99 percent of Americans from a tax increase.
Tax increases appear to have a very large sustained and highly significant negative impact on output. Since most of our exogenous tax changes are in fact reductions, the more intuitive way to express this result is that tax cuts have very large and persistent positive output effects
If, before 2020, there is a choice between further spending cuts, more borrowing and tax rises, the priority must be to avoid tax increases. They would disrupt consumption, employment and investment.
Tax increases slow economic growth. Why would you raise taxes? We need to reform spending, the tens of trillions of unfunded liabilities can never be funded by tax increases, that can only be fixed by reducing spending.
You've got to either say you're going to cut taxes and find some spending cuts. I think we ought to reform long-term entitlement spending in the country, but you can't out of one side of your mouth say, 'Yes, we're for tax cuts, we're for spending discipline, and we're for bringing down the debt.'
The fact is that a lot of the spending increases came during the Bush administration. Two unpaid for wars we got ourselves engaged in. A prescription drug plan that added enormous amounts to our spending, and the tax cuts at the high end that did not create jobs and create revenue coming.
It's wasteful spending like this that not only forces tax increases and cuts in vital services... but also really make you wonder: who is City Hall looking out for?
Sometimes, tax rate increases create the very problems that the spending is intended to cure. In other words, the tax rate increases reduce economic growth; they shrink the pie; they cause more poverty, more despair, more unemployment, which are all things government is trying to alleviate with spending.
The polls are with us on this. They say the American people, more than anything, want to see spending cuts rather than tax increases.
Nearly every policy during the Obama years was anti-growth: tax increases; minimum-wage hikes; ObamaCare; Dodd-Frank regulations; massive debt spending; the Paris climate change accord; an EPA assault against American energy; massive expansions of food-stamps programs and more.
And I have to tell you as a grandmother, I worry about the fact that my grandchildren are going to be paying for all the spending, including military spending, that has gone on and the tax cuts that have come through.
The Obama administration's large and sustained increases in debt raise the specter of another financial crisis and large future tax increases, further chilling business investment and job creation.
President Obama's reelection started the countdown for lawmakers to address the fiscal cliff and the statutory debt limit. Unless the President and House Republicans can agree on changes to current law, the U.S. economy will be in recession by spring.
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