The economy needs a victory by Republicans in the November congressional elections to make a speedy recovery, says Diana Furchtgott-Roth, a senior fellow at the Hudson Institute.
If current policies continue, the economy may take five to six years to rebound, just as Federal Reserve Chairman Ben Bernanke has predicted, she told Newsmax.TV.
But the bright side is that Republicans can re-take control of Congress, says Furchtgott-Roth, former chief economist for the Labor Department.
“Just as in 1994 we elected Republicans who then put in a system of lower spending and cut the size of government, resulting in a boom, the same thing might happen this November.”
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Many Republican candidates are very serious about cutting spending and keeping taxes low, Furchtgott-Roth says
“We have to hope they get elected, and then I think we will see a recovery much sooner.”
But if Democrats retain control of Congress, the economy is in trouble, she says. “If they get re-elected, they will be able to pass cap and trade, the Paycheck Fairness Act and all kinds of other things we haven’t even thought of yet.”
And how would Furchtgott-Roth advise President Obama to handle the economy?
“I’d keep taxes at levels they are now or cut them,” she said.
It’s important to maintain the Bush administration tax cuts of 2001 and 2003 that are scheduled to expire Dec. 31, Furchtgott-Roth says.
“If tax cuts aren’t extended there’s going to be a massive hit to our economy,” she said. “Tax rates are scheduled to go up across the board. That means Americans have less money to spend.”
Democrats are extending unemployment benefits because they say it’s important for people to have money to spend, Furchtgott-Roth explains.
“It’s also important for just individual Americans to have money to spend and not have this big hit to their paychecks,” she said.
“Every time, we’ve had tax cuts, starting with President Kennedy, President Reagan, President George W. Bush, the economy has boomed.”
Raising taxes would destroy the tenuous economic recovery, Furchtgott-Roth says. “It would be a disaster.”
President Obama needs to cut spending, she says, particularly entitlements – Social Security, Medicare and Medicaid. And the cap and trade plan should be dropped, as it amounts to a substantial energy tax hike.
“I would try to make employers want to hire Americans instead of the reverse,” Furchtgott-Roth said. “There’s an old joke that Democrats love jobs; it’s employers that they can’t stand. That’s what I’d try to change if I was President Obama.”
On the subject of inflation, Furchtgott points out that right now we’re in a deflationary environment.
“But with the deficits we have, the only way to repay the debt we owe is by inflating the currency. So many people see inflation coming along in the outer years.”
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