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Markets drop as no deal reached on 'fiscal cliff' yet

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    WSJ's Steve Moore speaks out

  • Duration 5:53
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Markets now as -- failed attempt at avoiding that fiscal cliff has sent stocks down.

I and were right around near the lows of the session for the Dow Jones Industrial Average -- a quick look at that we're gonna keep an eye and markets here again very volatile this time near some light trading -- Significant that -- at this point now also breaking this morning house speaker John Boehner is wrapping up -- remarks short time ago responding to last night.

Failed page to get and though it on his so called plan B that was aimed at avoiding the fiscal -- that's one option -- today speaker Boehner says the failure.

Was less about the plan itself -- more about the partisan divide growing in Washington and behind.

He says that divide is preventing DC from getting anything done.

We -- a situation where where.

Because of the political -- in the country.

Because of the divide here here Washington.

Trying to bridge these differences.

Has been difficult.

Steve Moore -- senior economics writer at the Wall Street Journal says Steve politics is one thing let's talk about the economy.

First and foremost here what does this mean right now I'm not having an agreement what kind of impact -- have on our economy.

You know what's amazing John about the story is the you know you're not been talking about this now what five weeks of the fiscal club and -- -- -- study -- the way it does that you know what this means what happened yesterday -- is it means we're no closer today to a deal that -- -- five weeks ago is as remarkable as that may seem.

Op Ed that the Republicans way it made one.

Last -- -- yesterday John Boehner did to try to get this -- that through the house and what I thought the house conservatives what they said is look we're not gonna vote for any tax increase over the president's.

Start putting some serious spending reforms on the table what -- -- what all of this means shot in terms of market says there are very jittery right now.

They're very concerned -- and I am for the first time in five weeks Jenna I'm concerned we may actually be going over that -- but I.

You'll get -- since Stephen exactly there what we see the Dow down a 150 points right yeah.

What is -- scenario look like actually going off the fiscal -- even if you know four -- short time.

Why are for a long time okay this an.

RS so so let's talk about what happens if we don't get a settlement on this tax issue by January 1 it means that starting in January 1 January -- -- A hundred million Americans -- -- will start paying much higher taxes on their payroll.

I'm more money withdraw with help from their other income taxes the average American.

Worker.

With -- and come say forty is semi 5000 dollars a year.

Is gonna pay 2500.

Dollars more per your taxes so it is a big hit John big hit that the US economy if we don't get this settled sometime very soon my.

About the conversations that are being had right now about our fiscal health -- talk a lot about taxes a lot about spending cuts.

But where's the focus on growth and building a bigger better America -- that conversation.

Well that's a great question you know that's one of the frustrations that I've -- with these discussions as you know we wanna get the fiscal health and better order as you just have we got to get the economic.

Growth going we got to get more Americans working and all of this talk about raising tax rates.

I believe puts America -- -- last competitive situation although I do think now is a good time to be used to getting serious about cutting -- and remember -- this is the kind of a complicated story because what we used the term fiscal -- there's really two clips were talking about one -- -- on the tax side of the equation which is what we've been talked about.

The other is these automatic spending cuts of domestic programs and military programs that would also begin on January -- that might acknowledge -- big when I talk to the Republicans on Capitol Hill.

They are more resigned than ever.

That we are gonna do some of those automatic spending cuts because they believe it's the only way we can get reductions in spending starting in 2013.

And and again all of this is sort of unknown and depends on how pathetic right as we -- that's right as we move ahead Mark -- a while -- economists as you know Steve is on our program yesterday I said OK got it what is the latest Y thirteen really look like -- he said you know not assume that he.

-- had some faith that we'll get a deal here with the fiscal cliff.

I'm curious your thoughts and that -- ahead Steve.

How well it's hard to predict right now because we think about this -- we got lots some way.

8910 days away from the new year and think about this no investor in America.

No business no worker knows what but that system is going to be so that that is very unsettling.

It -- that's all of this kind of uncertainty of the economy and it's -- just a rotten no way to run a country.

And it's a it's a real black guy for congress and the president.

I think we can get this beyond beyond us if we don't have a major tax increase that would get serious about cutting stunning look -- do that think 2013 could be a positive year for the economy.

With some really decent growth which we haven't had for four years.

But you know what congress last -- Bob -- coming up until after Christmas help.

And it the right thing well and and and maybe you know what they see the light over the next few days that's going to be one of the big questions -- and whether what that light is -- -- Another big question is this a situation where getting to the -- is briefly now a pox on both their houses and everybody a loser and -- I look I think they've both parties are -- -- I think the fact that they can't come to some agreement and a look I don't want to see any taxes rise you know that I think they're terrible for the economy but you may recall what was -- week or two ago I predicted you and I may be talking about this and laid out December 31.

And I think that this is common right down to the wire and -- make a prediction to you I do think December 31 is that they think they finally come to an agreement on this will almost literally in the eleventh hour.

While then they -- champagne I guess for that I'm I'm married Clinton may have -- -- -- that's the term pretty good Christmas period got a lesson that's.

They get it --

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