Tags: Fed | Nominee | Diamond | Tax | Cuts | Wealthy | Bad

Fed Nominee Diamond: Tax Cuts for Wealthy Is Bad Policy

Tuesday, 30 Nov 2010 11:47 AM

Nobel laureate Peter Diamond, a nominee to the Federal Reserve Board of Governors, said Tuesday that extending Bush-era tax cuts should be limited to those beneath the highest-income earners and should be temporary.

"For very high earners, their tendency to spend out of slightly higher after-tax incomes is small enough, that given the worries about the long-term debt trajectory of the country, I think it would not be good policy to extend the tax cut for the highest earners," Diamond said during an interview with Reuters Insider television.

"For the others, I think it's important to extend it, but I think it ought to be a limited extension," he said.

It is highly unusual for a Fed nominee to speak so candidly about fiscal policy — indeed nominees rarely grant on the record interviews.

Diamond's comments are likely to chafe Republican lawmakers, some of whom have been reluctant to support his nomination.

Presidential nominees to the Fed's seven-member Board of Governors must be confirmed by the Senate.

Democrats narrowly kept control of the Senate in mid-term elections this month.

President Barack Obama was set to meet with Republican congressional leaders on Tuesday morning, with fiscal policy high on the agenda.
Absent action, the Bush tax cuts are set to expire at the end of of the year.

Obama wants to extend them only for families making less than $250,000 a year, while Republicans are pressing to extend them for all taxpayers. Diamond did not make clear whether he felt Obama's threshold was appropriate.

Diamond further said more fiscal stimulus would help the economy.

"The monetary people are pushing as hard as they can, the fiscal people are not, and it would be nice to have them more in synch with each other," he said.

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Nobel laureate Peter Diamond, a nominee to the Federal Reserve Board of Governors, said Tuesday that extending Bush-era tax cuts should be limited to those beneath the highest-income earners and should be temporary. For very high earners, their tendency to spend out of...
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2010-47-30
Tuesday, 30 Nov 2010 11:47 AM
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