Geithner warns over Bush-era tax cuts

Financial Times:

Tim Geithner, US treasury secretary, on Wednesday suggested there was little room for compromise on the Obama administration’s plans to let tax cuts for wealthy Americans enacted under George W. Bush expire at the end of the year, saying even a delay until 2011 would hurt the economic recovery.

“The world is likely to view any temporary extension of the income tax cuts for the top two percent as a prelude to a long-term or permanent extension,” Mr Geithner said. “That would hurt economic recovery by undermining confidence that we are prepared to make a commitment today to bring down our future deficits.”

The US government plans to renew the Bush tax cuts for Americans earning less than $250,000 per year, but has faced criticism from Republicans and some centrist Democrats over its push for increases in higher-income tax rates to take effect immediately.

The fight over the tax cuts is expected to be a significant point of friction between Republicans and Democrats in the run-up to the midterm congressional elections, scheduled for November. In an interview with the FT last month, Paul Ryan, a leading Republican in the House of Representatives, said the battle over the Bush tax cuts was also a “dress rehearsal” for the 2012 presidential election.

Posted via email from Jim Nichols