>> PRESIDENT JOE BIDEN'S
PROPOSED $5.8 TRILLION BUDGET
AIMS TO PROVIDE MORE MONEY FOR
POLICE, EDUCATION, PUBLIC HEALTH
AND HOUSING WHILE AT THE SAME
TIME LOWERING THE FEDERAL
DEFICIT.
IN ORDER TO HELP MAKE THE
NUMBERS ADD UP HE INTENDS TO
RAISE TAXES ON PEOPLE EARNING
MORE THAN $400,000 A YEAR.
AND PROPOSING A MINIMUM 20%
INCOME TAX FOR HOUSEHOLDS WORTH
MORE THAN 100 MILLION.
>> FOR MOST AMERICANS, LAST FEW
YEARS WERE VERY HARD.
STRETCHING THEM TO THE BREAKING
POINT.
BUT BILLIONAIRES AND LARGE
CORPORATIONS GOT RICHER THAN
EVER.
RIGHT NOW BILLIONAIRES PAY AN
AVERAGE RATE OF 8% ON THEIR
TOTAL INCOME.
8% THAT IS THE AVERAGE THEY PAY.
NOW, I AM A CAPITALIST BUT IF
YOU MAKE A BILLION BUCKS GREAT.
JUST PAY YOUR FAIR SHARE.
>> EDWARD STUART PROFESSOR
EMERITUS OF ECONOMICS AT
NORTHEASTERN UNIVERSITY AND
MICHAEL MILLER PROFESSOR OF
ECONOMICS AT DePAUL.
>> WE HAVE INFLATION AT A
40-YEAR EYE.
WE ARE BARELY EMERGING FROM THE
PANDEMIC AND THAT IS HOPEFULLY
THIS MAJOR WAR IN EUROPE.
HOW WOULD YOU ASSESS THE STATE
OF THE U.S. ECONOMY RIGHT NOW
AND THE CHALLENGES IT FACES?
>> WELL, THAT IS EXACTLY IT IS A
GOOD-BAD THING.
TWO BAD THINGS ARE WE HAVE
INFLATION AND THAT IS NOT JUST
SOME INFLATION IT IS A LOT.
BUT I'M HOPING IT'S TEMPORARY.
IT WILL BE DOWN DRAMATICALLY BY
THE END OF THE YEAR.
AND OF COURSE WEIGHED HEAVILY ON
CONSUMER CONFIDENCE.
BUT WHEN YOU LOOK AT THE LABOR
MARKET IT IS AS GOOD AS WE HAVE
EVER HAD.
AND GDP IS GROWING NEAR THE
POTENTIAL WHICH MEANS IT CAN
CONTINUE TO GROW FOR A LONGTIME
WITHOUT CREATING ADDITIONAL
INFLATIONARY PRESSURES.
I THINK THE ECONOMY IS IN GOOD
SHAPE WITH THE EXCEPTION OF THAT
PRICE PROBLEM.
>> EDWARD STUART WE HEARD
PRESIDENT BIDEN'S RATIONALE FOR
WANTING TO RAISE TAXES AND THOSE
EARNING MORE THAN $400,000 AND
HOUSEHOLDS EARNING MORE THAN
$100 MILLION.
HOW MUCH ADDITIONAL REVENUE
COULD THAT RAISE?
AND IS IT ENOUGH TO BALANCE THE
BOOKS?
>> PROBABLY NOT ENOUGH TO
BALANCE THE BOOKS.
BUT ENOUGH TO MAKE A SIZABLE
DENT.
I THINK PRESIDENT BIDEN'S BUDGET
FORECASTS REDUCING THE DEFICIT
TO --
FROM 5% OF GDP TO 3% OF GDP AND
THAT IS A GOOD STEP IN ONE YEAR.
IT'S NOT GOING TO COVER THE
ENTIRE DEFICIT BUT YOU DON'T
WANT TO CLOSE THE DEFICIT TOO
FAST BECAUSE WE DO HAVE A
GROWING ECONOMY.
WE HAVE A HEALTHY LABOR MARKET.
AND WE DON'T WANT TO CHOKE OFF
THIS ECONOMIC RECOVERY.
WE'RE STILL BELOW IN TERMS OF
EMPLOYMENT ESPECIALLY WE'RE
STILL BELOW WHERE WE WERE IN
FEBRUARY OF 2020 AT THE
BEGINNING OF THE PANDEMIC.
WE HAVE LESS JOBS THAN WE HAVE
THEN AND MORE OF A POPULATION.
SO WE NEED TO STILL EXPAND
EMPLOYMENT SIGNIFICANTLY IN THE
COMING YEARS.
>> THE SUPER WEALTHY UNDER THE
PRESIDENT'S PROPOSAL WOULD PAY
20% ON THEIR INCOME.
THE CORPORATE TAX RATE WOULD
RISE TO 28%.
THE TOP INDIVIDUAL TAX RATE
WOULD GO UP TO UNDER 40%.
MICHAEL MILLER, AS AN ECONOMIST
WHAT DOES ADJUSTING THE TAX
SYSTEM IN THAT WAY WHAT DOES IT
DO TO THE ECONOMY?
>> YOU HAVE TO LOOK AT IT IF YOU
LOOK PURELY THROUGH THE LENS OF
A TAX DOES IT HAVE A STIMULATIVE
OR CONTRACTION AREA EFFECT.
IT HAS A CONTRACTIONRY WORK FOR
ADVISERS CONCLUDED THAT.
HOWEVER THE POINT OF THE TAX
INCREASE IS TO FUND Mr.
BIDEN'S SPENDING PROGRAM.
HE DID PROMISE THIS WHEN HE WAS
RUNNING FOR PRESIDENT.
AND THE ELECTIONS HAVE
CONSEQUENCES AND HE IS
DELIVERING ON WHAT IT IS HE
PROMISED HE WOULD BRING.
I WOULD BE HAPPY THAT IN FACT IF
HE IS GOING TO SPEND MORE HE IS
NOT GOING TO PRINT THE MONEY TO
DO SO HE IS GOING TO RAISE THE
TAXES NECESSARY TO PAY FOR IT.
AND IF YOU ARE EVER GOING TO
RAISE TAXES YOU DO SO WHEN AN
ECONOMY IS DOING WELL NOT IN
TROUBLE.
>> THE BUDGET IS SAID TO ASSUME
THE INFLATION WILL RETURN TO
NORMAL FROM 40-YEAR HIGHS.
EDWARD STUART, I THINK EVERYBODY
CRIES WHEN WE GO TO GET GAS.
IS IT A REASONABLE ASSUMPTION?
>> IT IS A REASONABLE ASSUMPTION
AND I THINK ONE OF THE THINGS
THAT HAS TO BE CLEAR IS THAT
THIS INFLATION THAT'S BEING
DRIVEN BY SUPPLY SIDE ISSUES
LIKE ENERGY PRICES, IS A
WORLDWIDE PROBLEM.
YOU HEAR A LOT OF COMMENTARY
PRESIDENT BIDEN HAS PRESIDED
OVER THE INCREASE IN ENERGY
COSTS OR INCREASE OF INFLATION.
EVERYWHERE HAS INFLATION.
I WAS TALKING TO THE PRODUCERS
BEFORE THIS, I CAME BACK FROM
PORTUGAL THIS MONTH.
PEOPLE IN PORTUGAL ARE PAYING $9
A GALLON FOR GASOLINE.
AUSTRIA AND GERMANY ANNOUNCED
TODAY THEY MAY BE INSTITUTING A
NATIONAL PROGRAM OF RATIONING
FOR NATURAL GAS.
SO YES, IT IS A WORLDWIDE
PROBLEM.
EVENTUALLY, ENERGY PRICES WILL
STABILIZE AND PROBABLY COME
DOWN.
BUT IT MAY BE SIX MONTHS TO A
YEAR BEFORE THAT HAPPENS.
I'M STILL WORRIED THAT THE FED
IS GOING TO BE TIGHTENING TOO
MUCH AND WILL CHOKE OFF DEMAND
AND DEMAND IS NOT THE MAIN
REASON WHY PRICES ARE GOING UP.
WE HAVE TO END THE WAR IN
UKRAINE.
WE HAVE TO GET BETTER ENERGY
EFFICIENCY WHICH THAT IS ONE OF
THE THINGS IN THE BUDGET OF
PRESIDENT BIDEN THAT IS ONE OF
THE KEY SPENDING COMPONENTS IS
TO INCREASE ENERGY EFFICIENCY
AND TO INVEST IN INFRASTRUCTURE
WHICH WILL HAVE LONG-TERM
PRODUCTIVITY BENEFITS FOR THE
ECONOMY AND BRING DOWN THE
LONG-TERM INFLATION RATE.
SHORT-TERM INFLATION I AM AFRAID
I DON'T HAVE GOOD NEWS.
AND IT'S EVERYWHERE.
IT'S NOT JUST IN THE UNITED
STATES.
>> THE DEFICIT FOR FISCAL YEAR
2023 WOULD BE 1.15 TRILLION.
THE NATIONAL DEBT SURPASSED 30
TRILLION.
IT'S HARD FOR US TO GET AROUND
NUMBERS THAT LARGE.
MICHAEL MILLER PRESUMABLY THE
U.S. CANNOT RUN DEFICITS LIKE
THIS FOREVER?
>> BASED UPON THE FORECAST I SAW
IN THE PRESENTATION OF THE
BUDGET, THERE ARE GOING TO BE
DEFICITS OF OVER A TRILLION FOR
THE NEXT 10 YEARS.
BUT UNDERSTAND AS WELL THAT THE
ECONOMY IS GROWING.
IN NOMINAL TERMS IF YOU COMPARE
THE DEFICIT TO THE SIZE OF THE
ECONOMY IT IS NOT CHANGING
DRAMATICALLY.
IT'S 4.5% OF THE GDP WILL BE IN
THE FORM OF THE DEFICIT.
WE SEE THAT THE ACCORDING TO THE
PROJECTION FROM THE PRESIDENT
HIMSELF, THE NATIONAL DEBT WILL
RISE TO JUST UNDER $40 TRILLION.
NOW, THAT WILL BE A LITTLE BIT
HIGHER PERCENTAGE OF GDP THAN WE
HAVE RIGHT NOW BUT NOT
DRAMATICALLY HIGHER.
IN SOME SENSE THE PEOPLE I'M
NOT --
I PREFER A SMALLER GOVERNMENT
WITH ENUMERATED POWERS.
I WILL HAVE IT LARGE THEN DOING
IT SUCH THAT YOU PAY FOR IT NOW
MAKES SENSE.