Tags: Lindsey | government | shut | down

Lawrence Lindsey: Government Will Likely Shut Down for 'Short Period'

Thursday, 26 Sep 2013 06:53 AM

By Dan Weil

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A government shutdown is likely in the offing, as it appears Congress and the White House will be unable to reach a budget agreement in time, says former Federal Reserve Gov. Lawrence Lindsey.

They need to do so by Monday to avoid a shutdown.

"The odds are we may have one for a short period of time, mainly because time is running out," Lindsey said in an exclusive interview with Newsmax TV.

Watch our exclusive video. Story continues below.



President Barack Obama and his aides failed to fully engage with Congress on the issue until two weeks ago, says Lindsey, CEO of the Lindsey Group and author of the new book "The Growth Experiment Revisited: Why Lower, Simpler Taxes Really Are America's Best Hope for Recovery."

Editor’s note: To order 'The Growth Experiment Revisited' at a great price — Click Here Now.

"If you're going to get this kind of complex negotiation done, you have to do spade work. And spade work wasn't done in advance," he said.

Obama has avoided involvement with the writing of much of the important legislation of his presidency, Lindsey says.

"This president has tended to be detached from the process," he said. "Unfortunately, the country needs to be pushed along by the president. That's what chief executive officers do."

Lindsey says Obama is wrong to demand that Congress pass a debt limit increase without conditions.

"The debt limit bill is part of the power of the purse," Lindsey said. "To imagine that the legislature, which we elect to control the government, should be silent when this issue comes up flies in the face of history."

Editor’s Note: Weird Trick Adds $1,000 to Your Social Security Checks

As for the Affordable Care Act, it's "a disaster waiting to happen," Lindsey says of Obamacare. "Delaying it for a year would be something that everyone, both sides of the aisle, could agree on."

When it comes to the Fed's decision last week to refrain from tapering its quantitative easing, "they made the move that was consistent with what they've been saying, whether that's right or wrong," Lindsey said.

The Fed said it would begin tapering if its rosy economic forecast turned out to be correct. But it didn't, Lindsey notes. "So, if you don't achieve your growth objective, then you shouldn't taper, and that's what they chose to do."

The Fed has been easing its policy for six years. But, "over time, monetary . . . policy become less effective," Lindsey said. "All you're doing is moving demand from the future to today. . . . That's what we've been doing."

Meanwhile, the government hasn't adopted the structural reforms that the economy needs, Lindsey says.

A 50 percent increase in energy output would help, given that energy accounts for about 8 percent of GDP, Lindsey says. So would entitlement and tax reform, he maintains.

On the tax front, Congress should consider a suggestion from the National Commission on Fiscal Responsibility and Reform (Bowles-Simpson), Lindsey says.

"Here is a bipartisan proposal that easily could be adopted, lowers the top rate to around 26-27 percent, broadens the tax base, actually collects more revenue than we collect now," he said. "It's not a perfect bill, but it's a winner."

Editor’s Note: Weird Trick Adds $1,000 to Your Social Security Checks

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