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 17,065.47 -32.98 -0.19%
Nasdaq 4,596.75 16.48 0.36%
S&P 500 2,001.86 -1.51 -0.08%
Treasuries 2.42 0.08 3.24%
Data as of 3:59pm ET
Company Price Change % Change
Bank of America Corp... 16.25 0.16 0.99%
Apple Inc 103.24 0.74 0.72%
Staples Inc 12.69 1.01 8.65%
Facebook Inc 76.63 1.81 2.42%
Intel Corp 34.50 -0.41 -1.19%
Data as of 3:44pm ET

Sections

Nike flexes its huge dollar advantage by signing Durant to a $300 million endorsement deal that trumps $285 million offer from Under Armour More

If approved by Los Angeles city council, the plan could raise wages for 567,000 workers by 2017. More

The latest celebrity photo hack shows your digital life doesn't end at your phone. If your stuff lives on "the cloud," you don't control the data. More

If approved by Los Angeles city council, the plan could raise wages for 567,000 workers by 2017. More

A scam where fraudsters impersonate IRS agents has now stolen $5 million from taxpayers, and this woman - who lost her entire life savings -- is just one of its victims. More

Market indexes 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. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.