Steve Forbes: US Heading for Recession With 2nd Obama Term

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Steve Forbes: US Heading for Recession With 2nd Obama Term
Wednesday, 07 Nov 2012 11:14 AM

By Bill Hoffmann and Kathleen Walter

inShare TweetinShare0 The United States is headed for a recession during President Barack Obama’s second term, renowned financial guru Steve Forbes predicted Wednesday.

"We won’t get a depression, thankfully. This is still a very resilient economy, but we will have a recession," Forbes, chairman and editor-in-chief of Forbes Media, told Newsmax.TV in an exclusive interview.

"Raising taxes on capital, raising taxes on small businesses, which we will likely get now, particularly since the Republicans did so badly in the Senate races, that is going to pose a real burden.

"We have Europe doing the same thing: piling on new taxes, Japan piling on new taxes. The Federal Reserve is going to continue to undermine the dollar, which is going to hurt small and medium-size business. It’s going to be very tough sledding next year."

Watch our exclusive interview. Story continues below.

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Forbes, who twice was a candidate for the Republican Party nomination for president in 1996 and 2000 and is the son of Forbes Magazine publisher Malcolm Forbes, says he was “stunned’’ by Obama’s sweeping victory over Mitt Romney.

"I thought Romney was connecting. But I think [Republican campaign consultant] Ed Rollins put it really well thi morning. He said Romney became a credible alternative to Obama in the debates, but he didn’t establish himself as the better alternative," Forbes said.

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"With the benefit of hindsight, he didn’t hammer home the way a Reagan would have, in terms of a positive agenda. He was very cautious in the last three or four weeks and he was cautious in the last debate.

"He had no major interviews in the last four weeks and played it safe, like Tom Dewey in 1948. He lost it because Obama had established a message that the economy was not his fault. They were still blaming Bush and the polls showed that.

"People felt that things were starting to get a bit better. The other thing that hurt, something beyond anyone’s control: the storm in the Northeast."

Obama’s second term will come with rocky financial patches for some industries, Forbes predicted.

"I think he does not have a mandate, but he will push hard for a second-term agenda, which will be more of the same as in the first term. If he can’t get it through Congress then he will do it through regulation," he said.

"This is very bad news for the pharmaceutical industry, very bad news for the coal industry, very bad news for high-tech. We are going to have a recession next year. It’s not going to help the president, but sadly the country is going to pay the price for it."

Asked whether the president will accelerate plans to further tax the rich and pursue policies that would redistribute wealth across the nation, Forbes said, I don’t think he needs to ratchet up the rhetoric, because he will get his tax increases. He will continue to wage regulatory warfare against the business community, even if he does it with a low voice.

"Again, you are going to have to look at what these so-called independent agencies, like the EPA, the FDA and others are going to do. It’s going to very harmful toward free enterprise for freedom."

Another major issue, the national deficit, will also continue to fester, according to Forbes.

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