The Bush tax cuts are set to expire on Dec. 31 of this year, and President Barack Obama either as a lame duck or facing a second term should let them expire, says Roger Altman, chairman at Evercore Partners and former Deputy Treasury Secretary.
Letting the tax cuts expire will free up $3.6 trillion in revenue in a decade, Altman says.
Add to that the $1.2 trillion in spending cuts agreed to by both political parties during the 2011 debt ceiling debate and the economy will improve as debt-to-GDP ratios decline.
"It’s not that you have to extend the tax cuts. They expire by law," Altman tells CNBC.
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The president can veto attempts to extend the tax cuts, and proponents are unlikely to muster two-thirds of the country's lawmakers to override such a veto.
Focusing on President Barack Obama's $3.8 trillion budget proposal sent to Congress, which calls for tax hikes on wealthier Americans, Altman says the bill will likely be killed off by Republican lawmakers in its current form.
"I don’t think anyone is satisfied with this [proposed] budget, including [the congressional Office of Management and Budget] and the White House," Altman says.
Republicans are already pointing out that the budget proposal hikes taxes but doesn't address entitlement reforms.
"It is imperative that both the president and Congress put greater focus on addressing the exploding costs of these programs," says House Appropriations Committee Chairman Hal Rogers, a Kentucky Republican, according to CNNMoney.
"Without meaningful action in this area, the nation's debt and deficit crisis will continue, increasing the risk to our nation's financial and economic future."
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