Neil Cavuto Answers Your Questions: Are We Headed Over a Fiscal Cliff?
Ahead of today's LIVE Cost of Freedom special, 'Countdown to Catastrophe?', we solicited your questions for Neil Cavuto on the Fox News Facebook page. Cavuto will answer some of them live on the air, but he took the time to answer a few more right here on the Fox News Insider.
What will happen if the Bush tax cuts expire? How will tax hikes and spending cuts impact jobs and the economy? Watch 'Countdown to Catastrophe?’ at 10a ET, and check out Neil's answers to your questions below.
AJ Niss: How much, if any, will this (fiscal cliff) hurt the economy?
Neil Cavuto: Well, A.J., if Congress fails to address the expiring Bush tax rates and the approaching automatic spending cuts by year-end, the impact could be quite severe. You're talking billions of dollars in new taxes and cuts in spending that could mean up to two million jobs lost. Even the most optimistic economists have predicted it could shave as much as a full point off of GDP, and seeing as we are barely "growing" that much now ... that's enough to put us back into a recession, at a minimum.
Nicholas Neese: How will this impact small businesses?
Cavuto: This is obviously the last thing small (or large) businesses need, Nicholas. It would confirm their worst fears. There's a reason these guys have been reluctant to spend, and hire. They've kept their powder dry, and wallets closed, fearing just such an uncertainty. If it turns certain, they just take this retrenchment of theirs and put it on steroids, likely cutting back on employee hours, or employees. Banks would be even more uncertain and more stinkpot with their money. If you think lending us an issue now, just wait. Businesses of all sizes have already experienced that firsthand, I suspect the freeze really freezes then.
Pamela Vazquez: Won't raising taxes kill the middle class by killing jobs?
Cavuto: Pamela, you cut to the core of this moment -- now is not the time to be raising taxes on anyone. The recovery is too bumpy, business conditions are too soft, and the mood among corporate bosses too anxious to risk doing anything that makes a bad thing worse. Businesses have already been running things mean and lean. Trust me, raising taxes right now … look for leaner, and meaner. Forget hiring, start thinking firing.
Kyle McDonough: Why isn't this being discussed on the campaign trail? I've heard no mention of it specifically and it's arguable one of the most significant approaching issues.
Cavuto: It's my big question as well, Kyle. I know each side has its game plan, making assumptions and plans based on the election. That's understandable, of course, waiting for a better deal and one that can be leveraged more your way if your guy wins. But at the rate of piling up debt four billion dollars a day, beggars can't be choosers, or procrastinators. You can't play Russian roulette with taxpayer dollars and taxpayers themselves, with this little time to spare. At the very least, I'd love to see them cobble together even a brief extension in all rates and spending, in the hope cooler and wiser heads will prevail next year. Just do something, anything, this year.
Kory Koehler: What jobs specifically will be created, saved or protected by not making this tax cut permanent.
Cavuto: Kory, none.
Paul Sheiman: Why is it conservatives feel that letting the tax cuts expire would send us off a "fiscal cliff," wouldn't it bring in more tax revenue?
Cavuto: Not if all taxes go up at the same time. You can't knock blood out of a stone. And in scores of states that have recently tried it, they've gotten even less revenue from it. The offset of raising someone's taxes is they cut back, and in the case of small businesses affected by the hike, they cut workers. Net-net, not good.
Julia Rhoades Mattera: If they don't renew the tax cuts, then when would we start feeling the pinch in our pocketbook? Immediately or when our 2013 taxes are due or a combination of both?
Cavuto: That's the great unknown, Julia. I suspect it's gradual. People don't stop living, after all. But businesses, fearing customers are retrenching, can immediately stop stacking their shelves. In this age of something called, "just in time inventory," companies just stop buying inventory, so effects can be immediate there. The fear becomes contagious and spreads rapidly. Much will be determined by how Washington rolls such hikes out. They have some wiggle room on spending cuts as well. But not much. I think it would not slightly stagger the pain and the impact.
Susan Comen: Is this another "close one" and then the government comes in and saves the day, or does it truly look like it's going to happen?
Cavuto: I trust we can avoid all this, Susan. We always see these guys pull a rabbit out of their hats at the last second. But this is getting old and increasingly, markets and ratings agencies are on to their tricks and games. They might not be so forgiving even if they do cobble together a deal, especially if it’s a bad deal.
Patti Lynn Isenberg: My question ... Why didn't the government call Neil Cavuto for some real solutions?
Cavuto: I don't know, Patti. I did give them my number!
Ryan Boutwell: What will be the immediate effects of the expiration of the Bush tax cuts and what will be the long-term effects?
Cavuto: Immediately, Ryan, we go into a recession. Longer term we give the world yet another reason to avoid investing here, like the plague.
Mark Rice: If cutting taxes is good, wouldn't elimination of all taxes and implementing the Fair Tax be better?
Cavuto: Yes, Mark, in my opinion, infinitely better.