Greedheads press Obama on tax cuts

[Enrique]

http://www.businessweek.com/news/2010-10-04/obama-discussion-veers-into-debate-on-tax-cuts.html

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The meeting of the President’s Economic Recovery Advisory Board today was supposed to focus on the role of education in promoting economic growth and veered into the tax debate when Martin Feldstein, a Harvard University professor who was chief economic adviser to President Ronald Reagan, told Obama that extending the tax cuts for two years would stimulate demand and boost the recovery.

“We’ve been expanding at a slower and slower pace, quarter after quarter; this doesn’t seem to me a time when you want to pull back demand by letting tax rates jump,” Feldstein told Obama. Extending the current income tax rate would “help to keep demand alive when the economy is weak,” Feldstein said.

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Donaldson said extending the rates temporarily would quell criticism from the business community that companies don’t know what to expect.

“What I would I suggest to you is that your administration, and particularly you, set forward with a statement that you’re not going to this time increase taxes for anybody and relieve that uncertainty,” Donaldson told the president. “That isn’t to say that you’re not going to do something about taxes but you’re going to delay that” until after the economy improves, he suggested.

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Obama rejected the advice, saying he’s been “unequivocal” about retaining tax cuts for most Americans while letting rates rise for individuals making more than $200,000 and married couples with incomes above $250,000.

“I don’t know of any economist, including I think Martin, who would argue that we are more likely to get a bump in aggregate demand from $700 billion of borrowed money going to people like those of us around this table who I suspect if we want a flat screen TV can afford one right now and are going out and buying one,” he said.

The president said spending the $700 billion revenue from letting the tax cuts expire for the wealthiest Americans would help boost aggregate demand most efficiently.

If the tax cuts are extended for upper-income Americans it would be permanent because of the political climate, Obama said. “You do that now you’re going to do it forever,” he said. Obama said he wonders whether Feldstein would make the same argument if he knew “that if you extended all the tax cuts for two years that you couldn’t hold the floodgates back.”

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[Kdillard]

1. Seriously. This is the type of crap that Obama has to deal with not only from people like

that but within his own party. I am glad to see him remaining firm. We can't afford it and I hope the Dems are able to keep enough people in power so we can get it through.