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Forbes to Moneynews: Obama’s Re-election Will Plunge US Into Recession

By    |   Wednesday, 04 April 2012 01:36 PM

The U.S. economy will slide back into recession if President Barack Obama is re-elected in November because the economy can't support his current policies that go against ideas championed by both Democrats and Republicans alike, Forbes magazine editor and former presidential candidate Steve Forbes told Newsmax.TV in an exclusive interview.

The tax code needs simplification and entitlement programs like Social Security and Medicare must be reformed, on which members of both parties agree.

"There is a consensus today, and the outlier is the White House," said Forbes, the president and CEO of Forbes Inc.

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"A lot of Democrats know we have to make changes on entitlements, and if the White House hadn't been there, there would have been agreements before now."

The Bush tax cuts, meanwhile, are set to expire at the end of December, and they must be renewed for the good of the economy — even if only for a few months — to give Congress time to draft and push through a comprehensive tax bill, Forbes says.

"The key is who wins the election. If Obama happens to win, I think you will see a market selloff, I think we will be on our way to another recession,"  says Forbes, who adds that perhaps even the hint of an Obama win may spark a big market tumble.

"I think the markets, if they anticipate Obama will win — Markets don't wait for the bad thing to happen. They sell off before it happens," said Forbes, who ran for the Republican presidential nomination in 1996 and 2000.

Former Massachusetts Governor Mitt Romney, the current front-runner although not yet the Republican nominee, would draw more applause among the business community.

A Romney victory would create a roughly 20-day gap from Dec. 31, when the Bush tax cuts expire, and sometime around Jan. 20, when he would be sworn in and likely extend the tax breaks.

"After the November elections, if President-elect Romney makes it clear that he'll sign temporary legislation on Jan. 20 extending those tax rates for a few months so Congress can make deliberations on a whole new tax bill, I don't think the markets are going to have much of a hiccup even though for 20 days, the tax cuts will expire," Forbes adds.

"I think they'll make the Bush tax cuts retroactive to Jan. 1 and keep them on for another five to six months to give Congress time to put in a new comprehensive tax bill."

Forbes, long a champion of a flat income tax with a single tax rate, says the U.S. tax system needs both cuts and simplification, and Democrats agree with him on that, too.

"There are agreements on simplifying the tax code. Bowles-Simpson made a move in that direction reducing the top rate to as low as 23 percent by de-cluttering the code," says Forbes, referring to a plan set forth by Democrat Erskine B. Bowles and Republican Alan K. Simpson, co-chairmen of the National Commission on Fiscal Responsibility and Reform, which was later tabled by the president, who favors hiking taxes on wealthier Americans.

"So the consensus is there. People know the entitlements are in trouble, they know we cannot continue this spending, they know we've got to simplify the code, and there's precedence."

Bipartisanship has prevailed in the past.

"We did it in 1986 and took out a lot of tax shelters in the tax code, got the top rate from 50 percent down to 28 percent and another rate of 15 percent. That didn't last very long. That's why I like a single rate so we don't have these relapses," Forbes says.

"But you had bipartisan support for it. I think once people in Washington read the election returns, those who survive will get the message."

Editor's Note: You Owe It to Yourself to Know What Obama and Bernanke Are Hiding From Americans

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Wednesday, 04 April 2012 01:36 PM
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