The U.S. economy stands a good chance of facing legislated tax increases and spending cuts if President Barack Obama is re-elected next month, said Glenn Hubbard, a senior economic adviser to Mitt Romney.
“There is a good chance, if the president wins, we go over the cliff,” said Hubbard, who serves as dean of Columbia Business School.
The so-called fiscal cliff in the U.S. includes $607 billion of tax increases and federal spending cuts set to kick in automatically at the end of the year unless Congress acts. Romney has called for reducing income tax rates by 20 percent, capping individual tax deductions at $17,000 and eliminating the estate tax and the alternative minimum tax.
Editor's Note: Obama Donor Banned This Video But You Can Watch it Here
Hubbard spoke at the Economist magazine’s Buttonwood Gathering in New York. He said that the current tax system in place in the U.S. does not support the size of government, especially at the rate the economy is growing.
“The fundamental choice about government is how big it is,” Hubbard said.
“If we actually wanted the government the president has proposed, you would have to raise taxes to pay for it. The president has government 23 to 24 percent of GDP and rising, there’s no way you could pay for that with the tax system that we have.”
The world’s largest economy grew at a 1.3 percent pace from April through June after growing at a 2 percent rate in the first quarter. Economists predict gross domestic product will expand at a 1.8 percent rate in the third quarter and 1.9 percent in the fourth, according to the median of 82 estimates in a Bloomberg survey conducted Oct. 5-10.
Entitlement Reform
Hubbard also defended Romney’s plans to overhaul entitlement programs, including Social Security and Medicare. He called Romney’s proposal to increase the retirement age and slowly reduce benefits on upper-income people as “progressive.”
“I don’t recall another major party candidate for the presidency ever to have been that specific,” he said. While the country “can afford a strong safety net” it can’t afford a “large welfare state for everyone,” he said.
Romney has said he would give future retirees the option of purchasing private health insurance using government vouchers to help pay for it.
Editor's Note: Obama Donor Banned This Video But You Can Watch it Here
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