This post is somewhat further afield than I normally wander, but Fridays are pretty slow in terms of news…
Yesterday Federal Reserve Chairman Ben Bernanke came out in favor of extending Bush Administration tax cuts that are due to expire shortly. Bernanke said that it would be a prudent short-term decision as the continuation of the tax cuts would act as an economic stimulus for the economy. Bernanke did not recommend a course of action to pay for the continuation of the tax cuts.
Currently the Obama Administration is in favor of letting the tax cuts expire for those making over $250,000 per year, and extending them for those making under $250,000 pear year. The expiration would affect the approximately 3 percent of Americans who make more than $250,000. Extending the tax cut for those making under $250,000 would cost $255 billion per year the cut is extended.
Last week Alan Greenspan said that the tax cuts should be allowed to expire in order to reduce the budget deficit. Today Treasury Secretary Tim Geithner also came out in favor of letting the tax cuts expire. Greenspan acknowledged that he thought allowing the tax cuts to expire would probably slow growth somewhat.
As with nearly every other political issue these days, the debate quickly turned into a partisan affair, with Democrats attacking Republicans for wanting to cut off jobless benefits while extending tax cuts for the richest Americans.
To be honest, I am not sure whose opinion to put the most weight on in this matter. Neither Greenspan, Bernanke, or Geithner have shown themselves to be particularly prescient in the bubble years or during the subsequent economic implosion.
What do you think about extending the tax cuts? Should we do it across the board, for some people, or not at all? Let me know in the comments section below.
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Andy
July 24, 2010 @ 9:43 pm
Politically and practically cost cutting alone cannot solve the deficit problem, which means the government is going to have raise taxes and let bush tax cuts expire.
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