Mark Zandi, chief economist of Moody’s Analytics, has a compromise solution to the debate over extending Bush era tax cuts.
“The prudent middle ground would be to forestall any tax increases in 2011 and to phase in higher rates on upper-income households in 2012, when the economy will be on firmer ground,” he writes in The New York Times.
If no action is taken, the Bush tax cuts will expire Jan. 1. President Obama wants to make them permanent for people with income of less than $200,000 and raise taxes for everyone else.
“The president’s plan would be taking an unnecessary gamble with the struggling recovery,” Zandi writes.
“Businesses have only recently begun to add jobs, and they appear to be a long way from hiring fast enough to reduce unemployment.”
But Zandi, who advised presidential candidate John McCain, disagrees with the Republican stance too.
“The Republican proposal to keep the current tax rates permanently in place even for the wealthy takes an unnecessary gamble with our long-term fiscal outlook,” he writes.
“Tax cuts do not pay for themselves. Even when President Ronald Reagan slashed much higher tax rates in half, this argument failed.”
Zandi’s arguments are unlikely to sway Republican leaders.
“You will find Republicans resisting very strongly any bill that allows taxes to be raised on any segment of Americans today,” Arizona Sen. John Kyl told Bloomberg.
“It’s just not a good idea.”
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