Tags: Trump | Fiscal | Cliff | Taxes

Trump: US Will Avoid Fiscal Cliff, but Taxes Can't Rise

Tuesday, 06 Nov 2012 11:22 AM

Lawmakers will roll up their sleeves and work together to steer the country away from a combination of tax hikes and spending cuts poised to strike the economy at the same time next year, said billionaire real-estate mogul Donald Trump.

At the end of this year, the Bush-era tax cuts and other tax breaks are scheduled to expire right at the same time automatic cuts to government spending outlined during the 2011 debt-ceiling deal are set to kick in, a one-two punch known as a fiscal cliff that could send the country into recession next year.

The nonpartisan Congressional Budget Office has estimated that failure to address the cliff could contract the economy by 0.5 percent next year, though lawmakers are wise enough to put political differences aside and guide the country away from disaster, Trump said.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

Tax hikes, which have struck fear in many, should serve as a concrete starting point to open negotiations.

"I think that, frankly, at the end of this election, people are going to sit back and they're going to talk, and I think they're going to get along for at least a period of time," Trump told CNBC.

"The end of the Bush tax cuts — that's coming to an end and the taxes are going to raise credibly, and nobody can allow that to happen, because we're in a very, very fragile economy," Trump said.

The United States remains weak, while OPEC nations and big emerging-market powerhouses such as Brazil and China are growing at a pace that comes at the expense of the U.S. economy, Trump said.

Allowing taxes to rise would crimp an already tepid economy marked by sluggish growth rates and high unemployment rates that, despite improvements, whitewash the image of an ailing labor market.

Simply put, Trump said, the Bush tax cuts cannot expire. "Something has to be done," Trump said.

"I think they'll be forced to sit down and negotiate some kind of compromise, and hopefully it's going to be the right compromise."

The entire world is keeping an eye on the fiscal cliff, as political bickering that fails to avert an economic contraction could have global ramifications.

"Everything must be done ... to negotiate the fiscal cliff in such a way that it does not result in any major additional damage or difficulties for the global economy," German Finance Minister Wolfgang Schaeuble told reporters at a Group of 20 meeting, according to Reuters.

Market watchers, meanwhile, remain in standby mode to see how the nation's policymakers avert disaster.

“The fiscal cliff has been a ‘seen’ risk that been priced into the market. Are we going to come to a good solution? Yes. Are we going to do that in a timely fashion? No. We always come to that at the very last second,” Cole Smead, director of marketing at Smead Capital Management, told Bloomberg.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

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