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Read My Lips: More New Taxes

White House balks as experts talk of tax cut extensions

• June 7, 2012 10:26 am

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Despite push-back from the White House, a growing coalition of Democrats and Republicans are considering temporarily extending Bush-era tax cuts for all income levels as a "fiscal cliff" approaches at the end of the year, threatening an economic slowdown and possibly another recession.

Figures such as former president Bill Clinton, former top Obama economic advisor Larry Summers, and Democratic Senate Budget chair Kent Conrad have floated extending the Bush tax-cuts as a short-term solution to the nation’s budget woes.

The Bush-tax cuts are set to expire on Jan. 1, 2013, while $100 billion in cuts to domestic spending will also go into effect. If the federal government fails to act, the Congressional Budget Office predicts the economy will shrink by 1.3 percent in the first half of 2013, enough to meet the definition of a recession.

"I think what it means is they will have to extend… have to put everything off until early next year," Clinton said on CNBC Tuesday. "That's probably the best thing to do right now… I don't have any problem with extending all of it now."

"Look, the real risk to this economy is on the side of slow down, certainly not on the side of overheating, and that means we’ve got to make sure that we don’t take gasoline out of the tank at the end of this year," Summers, also a former Treasury Secretary, said on MSNBC when asked about extending the Bush tax cuts. "That’s gotta be the top priority."

Senate Democrats and Republicans are also huddling to try and stave off the "fiscal cliff," and with a large, bi-partisan deal unlikely in a gridlocked Congress, some see extending the Bush tax cuts as an easy short-term solution.

Politico reports:

Senate Budget Committee Chairman Kent Conrad (D-N.D.), a member of the Gang of Six, said in an interview that it ‘might make some sense’ to extend all the taxes in the short term if lawmakers need more time to fundamentally reform the current corporate and individual tax system. ‘But on a short-term basis, … I think something like that is going to have to be done,’ he said of a temporary tax cut extension.

Summers’ and Clinton’s comments angered the White House, which rejected the notion of extending the Bush tax cuts.

The Hill reports:

From the White House on down, Democrats were left to play defense. A spokesman for President Obama insisted the president’s position on taxes had not wavered, and Democrats in Congress said even though they disagreed with Clinton’s initial assertion, the former two-term president remained one of the party’s most effective champions.

"Eight days a week I am happy Bill Clinton is one of the leaders of our party. That hasn’t changed," Rep. Robert Andrews (D-N.J.) said. "I just don’t agree with him on the substance of this." …

"The president’s position is that we absolutely should extend the tax cuts for the middle class; we should not extend and he will not extend tax cuts for the highest-income Americans," [White House Press Secretary Jay] Carney told reporters aboard Air Force One, according to an official transcript. "President Obama has been clear about his position, and it has not changed," he added under repeated questioning from reporters. "We should not extend, and he will not extend, the tax cuts — the Bush-era tax cuts for the wealthiest 2 percent of the American people. It’s bad policy."