Arthur Laffer: Obama’s ‘Train Wreck’ Ahead by Donald Lambro, Human Events, 01/27/2010

Arthur Laffer, creator of the Laffer Curve that showed how low tax rates boost economic growth, is warning anyone who will listen that the economy is headed for a “train wreck” in 2011 that will make the current recession look tame by comparison.

The famed economist, whose supply-side, tax-cutting policies enacted by President Reagan in 1981 put the economy on a record-breaking, 25-year economic trajectory of growth and prosperity, is telling Americans not to be lulled by sporadic signs of growth this year, because the economy is headed for a sharper decline next year when tax rates are expected to jump sharply, sending the economy into a new tailspin.

“It will make the decline in U.S. output from 2010 to 2011 worse than the decline in output in 2008 and 2009 which will catastrophic,” Laffer said in an interview with HUMAN EVENTS.

In a wide-ranging discussion about where the economy is headed, and the fiscal, tax and monetary reasons why, Laffer gives a bleak forecast of where President Obama and his administration are taking the country in the next three years — which he predicts will end with Obama’s defeat in 2012.

“Obama is a fine, very impressive person. He really is. Unfortunately, everything that he is doing in economics is exactly wrong. He is a crappy president,” Laffer said.

“Whenever a country is in the throes of spending too much and raising taxes, it’s a fiscal catastrophe in the making and this is what is happening now,” he said.

The economy in the short-term this year “will continue to improve, growing by more than 4 percent. By the end of 2010 the unemployment rate could fall to as low as 7 percent and the Obama administration will be busting with pride and conceit,” Laffer told his clients in his latest economic outlook for the year ahead.

But don’t be fooled into thinking the economy is actually coming out of one of the worst recessions of the post-war era, because this year will be a false recovery, he adds. The downturn will begin again when “2011 will enter center stage, followed quickly by an economic catastrophe. All the factors that will make 2010 (and have already made the last half of 2009) look so good will reverse direction, and 2011 will be a train wreck,” he said in his forecast.Click here to read the rest of the story

Bookmark and Share