ABC News' Jake Tapper reports:
In his inaugural column for the New York Times, President Obama’s former director of the Office of Management and Budget, Peter Orszag, suggests a compromise in the pending battle over whether the Bush tax cuts, set to expire at the end of this year, should be extended.
Orszag writes that “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. Why does this combination make sense? The answer is that over the medium term, the tax cuts are simply not affordable. Yet 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.”
The former OMB director writes that “Higher taxes now would crimp consumer spending, further depressing the already inadequate demand for what firms are capable of producing at full tilt."
The president has said the tax cuts should be extended for those who earn under $200,000 a year/$250,000 for couples, while congressional Republicans have said the tax cuts should be extended for everyone.
Orszag's column disagrees with the president's policy in two ways, one political and one substantive.
First, he argues that in order to get the Bush tax cuts for the middle class extended for two years, Democrats should be willing to also extend those for wealthier Americans if need be.
Second, he says all of the tax cuts — including those benefiting the middle class — should be ended in two years. President Obama wants the tax cuts on the middle class to continue in perpetuity.
White House deputy communications director Jen Psaki writes in an email that the president disagrees with Mr. Orszag’s recommendation.
"The President has been clear about his support for extending tax cuts for the middle class and about ending the tax cuts for the wealthiest 2 percent of Americans, which would cost 700 billion over ten years to extend at a time when we are dealing with a fiscal crisis and the independent CBO has listed as the least effective form of growing the economy,” she writes.
*This posted was updated.