Obama Advisor Appears to Support Bush-era Tax Cut Extension

Tax rate set to increase January 1, 2013, without further action

   

investorpoliticsletters2 Obama Advisor Appears to Support Bush era Tax Cut ExtensionRepublicans are seizing on comments made by former National Economic Council director Lawrence Summers to claim that extending Bush-era tax cuts is an idea with bipartisan support. Whether or not that’s what he meant is still up for debate.

On MSNBC’s “Morning Joe” program, Summers was asked what advice he would give to President Barack Obama. His response?

“The real risk to this economy is on the side of slowdown, certainly not on the side of overheating, and that means we’ve got to make sure we don’t take gasoline out of the tank at the end of this year. That’s got to be the top priority.”

The end of this year — January 1, 2013, to be precise — is when the Bush-era tax cuts are set to expire, if not further action is taken. Republicans generally want them extended across the board, while Obama has argued that the tax cuts for the wealthiest individuals should be repealed.

In an e-mail after the interview, Summers appeared to try and clarify his remarks as they related to the Bush-era tax cuts. “I fully support President Obama’s position on tax cuts,” he said, arguing that promoting demand is the highest short-term priority for the economy and that tax cuts would do little for demand.

Summers comments came a day after former President Bill Clinton appeared to say in an interview on CNN that tax increases and spending cuts should be set aside until the economy fully recovers. The Obama campaign was apparently not pleased by Clinton’s comments, and the former president eventually issued a retraction and a statement that he did not believe tax cuts for the wealthy needed to be extended.

This has led to both confusion on the Democratic side and assertions from the Republican side that both parties actually support a tax-cut extension. The mixed message from the Democrats, combined with the united front the GOP has on tax increases, will make it that much harder for the Democrats to implement the generally popular idea of a tax increase for the wealthy.

– Benjamin Nanamaker, InvestorPlace Money & Politics Editor

The opinions contained in this column are solely those of the writer.

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