Raise taxes now -- the elders of the economy say so

By Lex Haris, managing editor


NEW YORK (CNNMoney.com) -- First it was Greenspan. Now one by one, other elders of the economy are speaking out against deficits, and they're making the surprising argument for higher taxes.

Former Federal Reserve chairman Alan Greenspan was first and has taken the most extreme position, arguing that all of the Bush tax cuts of 2001 and 2003 should be allowed to expire.

Greenspan, no fan of big government and an initial backer of the Bush tax cuts, allows that higher taxes now could lead to slower economic growth, but has said that chipping away at the deficit is more important.

Joining him -- at varying degrees -- are David Stockman, former budget director in the Reagan White House, and former Treasury Secretaries Robert Rubin and Paul O'Neill.

The White House and most Democrats have argued for keeping the tax cuts in place for most households, but letting them expire for those earning more than $250,000, about 2% of the country.

Extending the tax cuts for everyone would cost the government $3.7 trillion over 10 years. Taxing the high-earners would get back about $700 billion of that.

David Stockman joins Greenspan at the far end, saying the nation can't afford to extend the tax cuts now. "You have to pay your bills. I say we can't afford the Bush tax cuts," Stockman told NPR this weekend.

On CNN's Fareed Zakaria GPS this weekend, Rubin who worked in the Clinton White House, and Paul O'Neill, who worked for George W. Bush, also talked about the need for higher taxes.

Rubin supports the White House position of extending cuts for most households, yet raising them on the wealthy. Simply, he worries about raising taxes too broadly while the economic recovery is still shaky.

That said, he is also a proponent of the estate tax, which expired this year, and is slated to return to 2001 levels -- a $1 million exemption and 55% top rate.

Said Rubin: "I would put an estate tax in place right now, immediately. I would increase the tax on the higher brackets."

O'Neill said one reason he was fired as Treasury Secretary was his take on tax cuts: "I was strongly opposed to the Bush tax cuts in 2003. I didn't think we could afford another tax cut." (video)

The issue now is not the Bush tax cuts, said O'Neill, who doesn't think the economy is in terrible shape. Rather, it's the need for fundamental tax reform, preferably one that is much simpler and emphasizes investment and growth over immediate consumption.

"If we let the Bush tax cuts expire, it's still the same stupid tax system."  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,827.75 12.81 0.07%
Nasdaq 4,787.32 29.07 0.61%
S&P 500 2,072.83 5.80 0.28%
Treasuries 2.23 -0.03 -1.15%
Data as of 4:55pm ET
Company Price Change % Change
Kinder Morgan Inc 42.32 0.00 0.00%
Apple Inc 119.00 0.00 0.00%
Facebook Inc 77.62 1.99 2.63%
Pfizer Inc 31.10 0.00 0.00%
Bank of America Corp... 17.11 0.00 0.00%
Data as of Nov 26

Sections

The European Parliament has voted to break up Google and weaken its dominance across the region. More

Warren called it "hypocritical" for the White House to oppose corporate inversions but nominate a person who has worked in this area. More

Two pilots encountered drones while flying over college football games and another pilot saw one while flying over the Hollywood sign. More

Natalie's Cakes and More has raised $84,000 through GoFundMe after protests trash store. More

Retailers are promising big deals this Black Friday, but are the savings actually worth the shopping mayhem? Test your deal-sniffing skills. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.