It was very interesting what Larry Summers said on the Meet the Press today. Or, rather, what he didn't say. While Summers was adamant that the 2001 and 2003 Bush tax cuts must be repealed, he never used the qualifying "for wealthier Americans" or some such. Maybe Obama is going to push to repeal all of them eventually. Summers also seemed to balk at the idea of leaving them in place until at least 2013. It looks to me like we will be raising taxes at the same time the Fed is raising interest rates and pulling money out of the system. Bring on the double-dip recession. Here is the exchange with David Gregory:
MR. GREGORY: Let's talk about tax cuts. About a third of his package is made up of tax cuts. Republicans want more. Specifically there's a question about the Bush tax cuts which, of course, expire next year. Does the president want to actually repeal those tax cuts this calendar year?
DR. SUMMERS: I don't think there's any question they have to be repealed. The country can't afford them for the long run.
MR. GREGORY: So repeal them this year? Because they expire next year. DR. SUMMERS: What the timing--what the--they expire, expire at the end of next year, and they have to be allowed to expire. What the timing will be, that's something that's going to have to get worked out.
MR. GREGORY: Because the House speaker says do it this year.
DR. SUMMERS: That's something that's going to have to get worked out through the legislative process.
MR. GREGORY: All right.
DR. SUMMERS: There's no question that the president's been very emphatic about this, as he was very emphatic during his campaign, that they can't be part of...
MR. GREGORY: OK, but timing is important. DR. SUMMERS: They can't be, they can't be part of the long-run budget picture.
MR. GREGORY: Well, understood. But...
DR. SUMMERS: And it's a timing--it's something that's going to be--that's something that's going to be worked out in the course of the...
MR. GREGORY: But what's his position, repeal them this year?
DR. SUMMERS: ...in the course of the legislative, legislative process. The president has made clear they--that the question of timing is one we're going to have to reach as we see how the economy unfolds...
MR. GREGORY: Yeah.
DR. SUMMERS: ...as Congress reaches its judgments. But they're not going to be with us for long.
MR. GREGORY: Why not? Why not? Conservatives make the argument, why would you want to raise taxes--if you repeal those tax cuts, taxes do go up on upper-income Americans, primarily. Why would you want to raise taxes right now? Why not put that expiration date off into, say, 2013? Why is that a bad idea?
DR. SUMMERS: Put the expiration date off into...
MR. GREGORY: 2013.
DR. SUMMERS: ...2013? First, it's a bad idea because we simply can't afford it. The president's inherited a trillion-dollar deficit, and a deficit with a baseline that is terrible as far as the eye can see. We've got to spend money now while we have a recession, while we've got this serious economic crisis, but as soon as the economy recovers we are going to have to find ways of getting the government's finances under some kind of control.