CNN news 2011-12-24 加文本

cnn news 2011-12-24

One person who is well and truly in the minutiae of tax cuts and payroll tax cuts is Glenn Hubbard, the chief economic adviser to the presidential candidate, Mitt Romney. He says the U.S. needs something more permanent than a tax cut extension.

And Glenn Hubbard joins me now from New York's Columbia University.

You'll forgive me if, again, we don't get into the -- into the weeds of the details of this.

GLENN HUBBARD, ECONOMIC ADVISER TO MITT ROMNEY: I promise.

QUEST: Yes, thank you.

But on the bigger picture, the bigger picture, look, we'll come to the politics of your man in a minute.

What is it you fundamentally think the U.S. economy needs that it hasn't had so far?

HUBBARD: Well, first, we have to understand the problem. There are real structural issues with the U.S. economy of needing to pivot much more toward investment and encouraging exports than we have in the past.

Underneath of all of that, we need policies that would put people back to work. And the first step is stop doing harm, stop creating policy uncertainty.

The political theater now in Washington is really a reflection of two fundamentally different visions of government and we're unfortunately seeing that play out in real time.

QUEST: Now, you see, that's the point, isn't it, because nobody would suggest that these aren't men and women of conviction who have a fundamental difference of opinion of how this should be settled.

But we can't go through until next November with this sort of paralysis -- or can we?

HUBBARD: No, exactly. Well, sadly, we might. But I don't think we can if we really want the economy to do well. And the right answer is to clarify the long-term, make improvements in the country's fiscal future by addressing long-term government spending problems. That would free up room to move in the short-term.

Republicans may have things they want to do. The president may have things he wants to do. But you need to do that step. Right now, we have no presidential leadership and this is simply mired.

QUEST: All right. But at the same time, let's take your -- the Republican Party, who came out of the budget battle perhaps more bruised because of their refusal to even countenance increases in taxes or -- or fees.

Was that a mistake, when just about everybody, to a person, seems to say, you can't do it all on spending cuts alone?

HUBBARD: Well, I think it's a two part argument, Richard. First, the main problem really is spending. If you look at the forecasts of future deficits, they're principally driven by -- by growth in government spending.

QUEST: (INAUDIBLE).

HUBBARD: In any real negotiation, of course both sides have to give.

And the question is, can you have higher revenue without higher marginal tax rates?

And the answer to that question is, yes, you can.

QUEST: Well, well, most -- some people would say no, you can't and the evidence is that you do have to have higher income taxes and nobody has successfully proven, in a workable way, any other way.

HUBBARD: Well, let me give you a clear counter example. The Bowles- Simpson Plan, which was bipartisan, appointed by the Democratic president of the United States, came out with a plan that raised revenue and lowered marginal tax rates. Marginal tax rates aren't the same as the average tax rates, my one little minutiae comment. We can raise revenue without raising rates.

QUEST: OK, assuming this goes forward -- and we're now seeing this -- this bitterness -- you are the economic adviser to one of the candidates. And your candidate, at the moment, is not leading.

Can he do it in time, do you think?

And if not, is he -- are you going to have to address his economic policy?

HUBBARD: Well, I think Governor Romney has had a very clear economic policy from the beginning, with a couple of points. One, this has to be about growth and he has a plan for encouraging economic growth and bringing back jobs.

The second is to reduce the size of government in the long-term. And he has a very clear plan there. I think those are the right ideas whoever the candidate is.

QUEST: Right. But -- but at the moment, that is not the idea that is floating the boat.

So are you going to go back to the drawing board or at least even tinker with Governor Romney's plan that might give him a boost, say, over - - over Newt Gingrich or whoever else might be the leader du jour?

HUBBARD: I think Governor Romney has exactly the right economic plan. It's one that is his and one he believes in. I don't see him tinkering with it because of the polls.

QUEST: And you, sir, when you look at the economy, finally and briefly, the U.S. has shown remarkable growth and resilience in the last three months.

Do you expect that to continue?

And, if so, what's the biggest threat to it, Europe?

HUBBARD: I do think Europe is a clear threat. The other threat to growth is simply to policy uncertainty in the US. But the bottom line is the underlying health of the private sector is actually quite good, if we can get rid of that policy uncertainty here and across the Atlantic.