Maintaining the Bush-era tax cuts for those with annual income of more than $200,000 isn’t the best way to help the economy, says White House economic adviser Larry Summers.
While Summers didn’t rule out the possibility of keeping the wealthy’s reductions, he told CNBC that the money could be put to better use funding investment.
"With deficits looming as seriously as they are, why is now the right moment to lock in several hundred billion dollars of tax cuts for 2 percent of the population when we could be using those revenues to strengthen incentives for investment in the country's future?" he said.
Tax cuts will expire for everyone if Congress doesn’t act before Dec. 31. The White House favors extending the reductions only for those with income below $200,000, while Republicans favor continuing them for everyone.
As for Summers, "I think the case is pretty clear,” he said. “If you look at what the vast majority of economists are saying, what will stimulate the economy more are measures that are targeted at investments, measures that are targeted at research and development," he said.
"So I think those are the right steps forward."
Summers has an ally in CNBC commentator Jim Cramer, who has criticized much of Obama’s economic policy.
“No one wants higher taxes, but millionaires should pay more,” Cramer said on his “Mad Money” show. “Millionaires got a break for a long time.”
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