Is the US slipping into a recession?

Forbes media chairman Steve great to see you thank you so it does seem I mean this is just one example of of several that we have seen particularly in the high-tech area but it does seem we are kind of slipping into a recession doesn't it certainly a real slow down I don't know what the economic theologians are going to call it but uh people are.

Going to feel a lot of pain there's a lot of hiring done during the downturn during the covet lockdowns that people have felt they had to do because labor was thought to be short and that even today companies are loath to leave people off because they know how hard it was to hire them in the first place and train them once they hire them and train.

Them and so now you have a situation where you're going to see a cascading effect employers first of all they've already seen in the statistics they're starting to lay off people they hired part-time that's the first indication that things are going down south and so they're doing that and now companies are finally saying we got to bite the bullet.

And reduce the payroll well we do have this overhang we keep talking about the 10 million more jobs and job Seekers right now so is that could that cushion us from a a technical recession I don't think so at the end of the day recession is down you know you do less things people buy less so even if you're not in the labor force one you're going to see.

That the idea that you can go back in and whenever you want is going to go by the by the door about the out the door and a lot of the things that kept you enabled you to do it like generous government benefits are going to come under scrutiny especially on the state level as their but they can't print the money so they're going to they're.

They're going to have to uh tighten them out Look at California one point they had a hundred billion dollars to play with now they're facing a 25 billion dollar deficit Geniuses out there I know but other states to a lesser extent are facing the same yeah that was kind of a pandemic effect because on the one hand Silicon Valley did pretty good in the.

Pandemic when people were at home using all their products and they were getting all that coveted money because they had a friend in Congress named Nancy Pelosi but that both of those things are gone now that's right and even around the country estate so that the they had Surplus especially blue states which drove people out drove businesses out.

Are going to face a real hard time in terms of budget and they're going to come before Congress this is why a good thing we have a house majority even just a small one you're going to come before Congress wanting a bailout saying oh this is beyond our control got to bail us out but the government's going to need somebody else because if we go into.

Recession a lot of companies are going to go bankrupt that means a lot less federal taxes as well I mean the federal government that debt that 31.4 billion trillion dollar debt is going to Blossom even more that's right and they're going to pay more interest on it thanks to the Federal Reserve raising interest rates yes and a lot of.

That debt was short term so suddenly go from one tenth of one percent to four four and a half percent that's going to bite and the other thing that's really could be hurting people out there is the housing market the housing markets it gets killed when we go into recession it's already slowing down we have this today we heard existing home sales down.

7 17.8 percent this is the weakest number since 2014 so it's it's really beginning to hurt real estate and that market is being distorted too by a lot of people did get very very low mortgage rates you know two two and a half percent three percent right they're going to be low to sell their house and and a market where.

You're going to suddenly have to go buy another house or replacement house you want to move up a little bit you're gonna have to pay six percent oops Yeah so Democrats are going to be facing this going into 2024 but Republicans have the house and the question is how are they going to respond to this what are going to be their Solutions one of their.

So-called solutions to our economic woes is turning to this consumption tax however they want to Define it as national sales tax consumption tax whatever that you has been uh proponent of flat tax for a long time which is a very different solution Define the difference between the two well sales tax is what.

It says it is and the proponents say this will get rid to the IRS this will get rid of the income tax and get rid of the payroll taxes Therefore your money will go your pay will go up a little bit but it doesn't cover the whole thing their tax rate is 30 percent you tell people they're going to get hit with a 30 percent sales tax they go out and buy.

A house hundred thousand dollar sales tax good luck with that on the campaign Trail now the proponents say well we'll give people what they call a rebate or prebate each month of 800 or a thousand dollars that presents a whole slew of other problems and it's a back door way David to a national minimum income though those monthly payments they're.

Proposing and so flat tax is simply a single rate you have generous exemptions are out of some for kids simple 17 15 above that and that's it and so a family of four no federal income tax in your first fifty three thousand dollars of salary what's not the line 30 sales tax by the way the great Milton Friedman the free market Economist was a fan of the.

Flat tax here's here's what he said several years ago when we had rates a lot of different rates going up to 70 percent he said let's suppose you made no change in the law except you put a flat 19 percent rate in instead of 14 to 70. in fact you would raise a good deal more money than you do now the reason for that is it wouldn't pay people to.

Get around the tax so much here's a man who hires an expensive accountant sets up a trust makes gifts in order to get out of a 50 or 60 percent rate for 19 it wouldn't be worth his while so the point is you wouldn't have to spend all the money on getting around taxes you just pay the flat tax and it doesn't punish you for being successful or trying to be.

Successful and so your energies your brain power is going instead of this corrupt crazy code to doing something productive new products new Services New cures for diseases my age I kind of like that well the other thing of course is that you could always use you could say we're going to go to consumption tax and and we'd end up having two taxes both in.

Income tax and a consumption that's why if you ever want to do what you first got to get rid of the 16th Amendment to the Constitution which allows Washington to impose an income tax I guarantee if you don't get rid of that Amendment you will end up with most States haven't what every country has both that Amendment and prohibition were the two.

Worst amendments we ever had I think but uh we got rid of one we should maybe get rid of another one I'll drink to that Steve good to see you have a great weekend you too thank you

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