Obama's Ex-Budget Boss: Keep All Bush Tax Cuts for Two More Years

President Obama's former budget director has broken with the White House over the thorny issue of what to do with the generous tax cuts enacted under President Bush and due to expire at the end of this year. Keep them all in place for another two years, Peter Orszag says, then kill them.

"The best approach is compromise," Orszag says in a debut op-ed piece for the New York Times. "Extend the tax cuts for two years and then end them altogether. Ideally only the middle-class tax cuts would be continued for now. Getting a deal with Congress, though, may require keeping the high-income tax cuts, too. And that would still be worth it."

The White House quickly rejected Orszag's compromise. "We cannot afford to extend the tax cuts for those making more than $250,000 a year," Press Secretary Robert Gibbs said at a briefing Tuesday. The Obama administration favors keeping the tax reductions for families making no more than $250,000 annually, but Republicans in Congress want to extend them for everyone.

Over the medium term, Orszag said, the tax cuts, enacted in 2001 and 2003, "are simply not affordable. Yet no one wants to make an already-stagnating jobs market worse over the next year or two, which is exactly what would happen if the cuts expire as planned. Higher taxes would crimp consumer spending, further depressing the already inadequate demand for what firms are capable of producing at full tilt."

But bring the tax cuts to an end in 2013, he recommended, even though that "will surely require a presidential veto on any bills to extend them after that."

Orszag left on good terms as head of the Office of Management and Budget in July and recently signed on as a columnist with the Times.