The White House strongly disputed GOP arguments for renewing high-end tax cuts on Tuesday, arguing that extending them would do little to aid the economy.
Christina Romer, a top economic adviser to President Obama who serves as the chairwoman of the Council of Economic Advisers, made the administration’s case for letting tax cuts set to expire at the end of the year run out for high earners, while extending them for middle-class families.
“Recently, some have argued that extending the high-income cuts is necessary for the economy,” Romer wrote in an official blog post. “This is simply wrong.”
Extending tax cuts for high earners would do little to strengthen the economy and add jobs, Romer said, while maintaining the cuts for lower earners would provide an immediate stimulus.
“If lawmakers are truly concerned about job creation, as they should be given the painfully high rate of unemployment, many approaches would be more cost effective than extending the Bush tax cuts for high-income earners,” she said.
The blog post is a shot across the bow at Republicans as a legislative fight escalates over the fate of tax cuts sought by President George W. Bush’s administration. Those cuts are set to expire at the end of this year, and spring upwards to their pre-2001 levels, unless lawmakers extend them.
Republicans have pressed the administration and Democrats in Congress to extend all the cuts, arguing that many small-business owners who pay income taxes on their company’s earnings would be hurt. Obama has said he’d like to see the tax cuts repealed for families earning more than $250,000 a year and individuals making more than $200,000 a year, while extending the rest.
The administration also warned that extending the high-end tax cuts would lead to pressure to make them permanent. This, Romer said, would open a serious gap in the budget deficit for years to come.