President-elect Barack Obama's unwillingness to cut corporate taxes, will push the United States into the same recessionary abyss that Japan has endured over the past two decades, says Steve Forbes, editor in chief of Forbes magazine.
"If they were truly interested in stimulus, they would do what works: they would cut taxes," the former Republican presidential candidate told Fox Business News.
"But they won't, which means Japan redux. Taxes are prices. If they keep prices high," rebates alone won't change behavior, Forbes said.
The key is to cut corporate taxes. “We have the second highest rate in the developed world," Forbes says.
"And cut the 25 percent middle-class rate to 15 percent permanently. Don't pay attention to high income people."
Forbes isn't too impressed with the government's handling of the financial crisis so far.
"If Washington stops making mistakes — and the law of averages says we're due for one or two good decisions — there is no reason why the economy can't show signs of life in the spring," he says.
"People won't feel it for a few months, but the basic strength is still there."
Obama is pushing for middle-class tax cuts, but it's unclear whether he has the support of House Speaker Nancy Pelosi.
"I have to have a clear hold on the cost,” Pelosi told Bloomberg TV.
“We want to have enough investment to change the economic path, but not so much that we're weighted down by a bigger deficit."
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