What to do with President Bush's soon-to-expire tax cuts? On the one hand, they add hundreds of millions of dollars to the deficit, but on the other, people (and the economy) can really use the money right now. The Republicans want to extend them, the Democrats aren't in agreement, and President Obama only wants to extend them for individuals making under $200,000 or couples making less than $250,000. Joining the fray on the issue but without entirely toeing the administration line is Peter Orszag, Obama's recently departed budget director, who debuted his occasional column in the Times today.
The nation faces a nasty dual deficit problem: a painful jobs deficit in the near term and an unsustainable budget deficit over the medium and long term. This month, the Senate will be debating an issue with significant implications for both — what to do about the Bush-era tax cuts scheduled to expire at the end of the year.
In the face of the dueling deficits, the best approach is a compromise: extend the tax cuts for two years and then end them altogether. Ideally only the middle-class tax cuts would be continued for now. Getting a deal in Congress, though, may require keeping the high-income tax cuts, too. And that would still be worth it.
Orszag might as well be John Boehner when he writes that "no one wants to make an already stagnating jobs market worse over the next year or two, which is exactly what would happen if the cuts expire as planned." And it wouldn't be surprising to hear Boehner boasting that "even Obama's own budget director wants to keep the breaks in place" when Congress returns from its summer recess and the tax-cut debate really heats up. For now, though, the White House is staying firm. According to CNN, "White House aides were quick to make clear that Orzsag's advice will not change the president's view that the tax cuts for the rich need to expire at the end of the year in the name of fiscal discipline." That Orszag such a troublemaker.
One Nation, Two Deficits [NYT]
TRENDING: Orszag Breaks With Obama on Bush Tax Cuts [Political Ticker/CNN]