Former Director of the Office of Management and Budget Peter Orzag said Tuesday that Congress should work towards extending the Bush tax cuts for two years, at which point he said they end, permanently.
In his first New York Times column, Orszag said he believes the best way to handle the country’s short term jobs problem and a growing deficit for the long term is to temporarily extend the tax cuts set to expire this year.
“In the face of the dueling deficits, the best approach is a compromise: extend the tax cuts for two years and then end them altogether,” Orzag wrote.
The former OMB Director also said he believes that higher taxes would reduce consumer spending, severely affecting the demand for products across the boards. While permanently extending these tax cuts would increase the deficit by nearly $3 trillion over the next ten years, Orszag argued that the tax cuts are simply not affordable and, by letting them expire, an already stalled jobs market will be dealt a heavy blow, worsening its status.
Orszag said this is not a time for partisan politics, but rather a time where Congress and the administration need to work together to solve the “One Nation, Two Deficits” problem facing the country.
“Both approaches lock us into a budget scenario out of which there are few politically plausible routes of escape,” Orszag said. “Senate Democrats and Republicans almost never come together anymore, [and] this month, they should fight the dual deficits rather than each other. Let’s continue the tax cuts for two years but end them for good in 2013.”