–‘Fiscally Irresponsible’ To Renew Tax Cuts For High Income Earners

By Ian McKendry

WASHINGTON (MNI) – The economic recovery still faces many
challenges and more policy action is needed to help it along, outgoing
Council of Economic Advisers Chair Christina Romer said Wednesday.

“The obvious thing is to say we need to do more now,” Romer said
during a question and answer session following her final public
appearance, a speech at the National Press Club. Romer had announced at
the beginning of August that she would be stepping down from her post
effective Sept. 3.

“Compared with the problems we face, the turnaround has been
insufficient,” Romer said, adding that both the economic downturn and
recovery are in “uncharted territory.”

She said one way to help the economy is to continue the Bush tax
Cuts for the middle class.

“Tax cuts can absolutely be an important recovery tool,” Romer
said, but warned that tax cuts should be limited earners who make less
than $250,000 a year.

Tax cuts for high income earners, she argued, would be “fiscally
irresponsible.”

Romer said while additional support is needed, it should be done in
a responsible way and paid for with future spending cuts or future
revenues.

Still, Romer said it is important that the economy grows and that
“concern about the deficit cannot be an excuse for leaving unemployed
workers to suffer.”

Romer said the high unemployment rate needs be addressed, as
long-term unemployment can lead to workers’ skills deteriorating —
rendering them permanently unemployable.

While Romer said the economy still faces many “headwinds,” she
added that policy actions taken by the administration have made an
“enormous impact.”

The administration’s flagship program to boost the U.S. economy was
the American Recovery Act, and she said estimates of its impact on
the recovery have been accurate, even though the recession had been more
violent than originally forecasted.

Romer, who plans on returning to her position as professor of
economics at the University of California, Berkeley, said one thing she
regrets “is that there is still so much unfinished business.”

“Policymakers need to find the will to take the steps needed to
finish the job and return the American economy to full health, and no
one should be blocking essential actions for partisan reasons,” Romer
said.

** Market News International Washington Bureau: 202-371-2121 **

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