President Barack Obama should cut taxes instead of acting against business, says Mark Skousen, a columnist for Franklin Prosperity Report, published by Newsmax.
“I would like to see a sharp reduction in the corporate income tax, maybe a tax credit to hire workers," he told Newsmax.TV. "Extend the Bush tax cuts.”
Meanwhile, the president should rescind entitlement programs, Skousen says. “Obamacare is a disaster. You want to reduce the minimum wage and other intervention in the labor market.”
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There’s a lot the White House can do to revive the economy, he says. But, “The Obama administration is doing nothing to be pro-business,” Skousen said.
“It’s raising the cost of regulation and imposing new entitlements. All of this is causing uncertainty, and it’s causing businesses to take a wait and see attitude on hiring.”
Skousen agrees with economist Nouriel Roubini’s assessment that there’s a 40 percent chance of a double-dip recession. “We’re definitely headed in that direction,” Skousen said.
Private investment and GDP growth are declining. And the Federal Reserve’s policy of keeping short-term interest rates near zero is leading banks to borrow money and simply invest it in Treasury securities rather than loaning it to small business, he says.
“It’s not going into productive investment,” he said.
The economy is recovering, Skousen says. “Corporate profits and manufacturing are responding well.” But it’s a slow recovery, unlike the V-shaped rebounds of the past.
“This is exceptional, largely due to fear of the financial crisis,” he said. “The monetary system is shaken. It will take a lot more time to recover.”
Exactly how long will depend on the Fed, Skousen says.
“If the money supply starts spurting up, we will probable see a short-term recovery. If we continue to overregulate the economy and interfere, it might be another five years.”
That would have strong political implications, he says. “It would be a death knell for Democrats. Republicans will take back Congress and probably get some positive legislation out of that.”
As for inflation, Skousen sees little evidence of it.
“Short-term there is no inflationary pressure,” he said. “If anything the market forces of deflation are stronger than the government forces of inflation.”
Money supply hasn’t grown during the past year, keeping inflation and the economy at bay. Gold is the only indicator pointing to inflation, Skousen says.
“Until the Fed goes back to inject more money into the system, we’ll be in no man’s land.”
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