US Already in 'Recession,' Extend Tax Cuts: Bill Clinton

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US Already in 'Recession,' Extend Tax Cuts: Bill Clinton

CNBC.com | June 05, 2012 | 04:01 PM EDT

Former President Bill Clinton told CNBC Tuesday that the US economy already is in a recession and urged Congress to extend all the tax cuts due to expire at the end of the year.

In a taped interview aired on "Closing Bell," the still-popular 42nd president called the current economic conditions a "recession" and said overzealous Republican plans to cut the deficit threaten to plunge the country further into the debt abyss.

"What I think we need to do is find some way to avoid the fiscal cliff, to avoid doing anything that would contract the economy now, and then deal with what's necessary in the long term debt-reduction plans as soon as they can, which presumably would be after the election," Clinton said.

"They will probably have to put everything off until early next year," he added. "That's probably the best thing to do right now. But the Republicans don't want to do that unless he agrees to extend the tax cuts permanently, including for upper income people, and I don't think the president should do that."

However, Clinton did say that Congress would be best off agreeing, at least for the time being, to extend all the tax cuts that are set to expire at the end of the year, including the so-called Bush tax cuts named after Clinton's successor, George W. Bush.

Those across-the-board cuts have been criticized by Democrats who say they were skewed toward upper-income earners.

To counter the cuts, President Obama proposed the Buffett Rule — which was ultimately defeated — that would have imposed a surtax on millionaires.

On tax questions in general, Clinton said it's reasonable to expect top earners to pay more and he defended the current tax structure, which he said wouldn't look so bad if the economy was doing better.

"They're still pretty low, the government spending levels. But I think they look high because there's a recession," he said. "So the taxes look lower than they really would be if we had two and half or 3 percent growth and spending is higher than it would be if we had two and a half or 3 percent growth, because there are so many people getting food stamps, so many people getting unemployment, so many people on Medicaid."

In the midst of a heated re-election campaign, Obama has faced a barrage of bad news lately, from anemic job growth and an increase in the unemployment rate to weak factory and housing activity. First-quarter gross domestic growth registered a meager 1.9 percent.

Like the current Oval Office resident, Clinton blamed much of the economic damage on the sovereign debt crisis — "this European thing that's having a bigger impact than people know" — as well as politics, saying, "The thing that cost jobs here has been the Congress's policies."

Politically, Clinton has found himself in a ticklish spot lately as reports have re-emerged about his sometimes ambivalent stance toward Obama. He recently praised Republican challenger Mitt Romney's record in private equity at Bain Capital, another remark that amplified the notion that the two don't always see eye-to-eye.

Clinton said Obama is "on stronger ground" when he challenges Romney's record as governor of Massachusetts, not as a businessman at Bain.

"There's a company not doing well, that's failing, and you buy it and have to impose some economies there and cutbacks because you're trying to turn it around so it can thrive in the economy. Whether you succeed or fail, that's a good thing to do," he said. "If you go in and buy a company and intentionally load it up with debt, loot its assets and the people lose their jobs and retirements...that's a bad thing."

"So to make a judgment on that, you have to know a lot of facts about every case," Clinton added. "I just think we'd all be a lot better off if we talk about we have two people running for the president. What would they do?"

Clinton had an average approval rating of 55 percent during his two terms, compared to 49 percent for Obama, who currently is at 46 percent, according to Gallup. Clinton made no predictions about the election but he said it will be important for Obama to draw clear lines in order to win.

"The most important thing in this election is what will President Obama do and what will Gov. Romney do with the economy and how will they deal with people who disagree with them," Clinton said. "Will they be divide and conquer, or would they be, 'let's bring everyone together'?"