Going Off 'Cliff' Would Help Wall Street: Gov. Dean
Producer, CNBC's "Squawk Box"
The only way to solve America's debt crisis and bring certainty to Wall Street and the business community is to go over the fiscal cliff, said former Vermont Governor Howard Dean, who also acknowledged that such a move would send the U.S. economy back into recession.
"No matter what people said during the election, you cannot solve this deficit problem without everybody paying more taxes. Not just rich people," the one-time Democratic presidential candidate told CNBC's "Squawk Box" on Tuesday.
Dean believes that the benefits to allowing the mandatory tax increases and spending cuts to take effect at year-end outweigh the potential damage of another recession. "The economy is much stronger than it was three years ago. Do I think this is painless? Absolutely not."
The Congressional Budget Office predicts that going off the fiscal cliff would result in a 1.3 percent contraction in the nation's Gross Domestic Product in the first half of next year, and then an expansion of 2.3 percent in the second half of 2013.
"Wall Street, who's moaning and groaning about this, is going to do much better," claimed Dean. "Certainty is critical for the business community."
The former Democratic National Committee chairman also points out that going over the cliff does not require any action by the divided Congress. "You want to get obstructionists--my way or the highway--too bad. The vote's already been taken. The Republicans have already agreed to this. Let's just do it."
Former Republican Presidential Candidate Rick Perry--appearing on "Squawk Box" with Dean--argued against going off the cliff. The current Texas Governor pointed to his state's lower taxes and spending restraints as a model for how the nation should deal with its debt problem.
The Lone Star state has indeed had a good run this year, and Texas was choosen by CNBC as America's Top State for Business in 2012.
"If the last decade [in Texas] is an example of what would happen to America if we put these policies into place, it is the growth that's going to occur will be substantial. And that's how we pay off the deficit," Perry said.
Dean countered by saying, "My fear is [Obama and Republicans] kick the can down the road. They'll get half the deficit reduction and then half of that will be funny money and accounting gimmicks."
"You'll be right back here in 6 or 8 months," said Dean. "I say take the medicine now and everyone will have certainty."