Geithner Defends Plan to Let Tax Cuts for Wealthy Expire

US. Treasury Secretary Timothy Geithner will Wednesday continue to defend the White House plan to let tax cuts for the wealthiest Americans expire at the end of the year, arguing that extending them would imperil the fragile economic recovery.
By: VICTORIA MCGRANE: wsj.com
"Borrowing to finance tax cuts for the top 2% would be a $700 billion fiscal mistake. It's not the prescription the economy needs right now, and the country can't afford it," Mr. Geithner will say, according to an excerpt from his speech provided by Treasury. Mr. Geithner will deliver the remarks Wednesday afternoon at the left-leaning Center for American Progress.

Mr. Geithner's argument stands in direct contrast to Republicans and some congressional Democrats who argue that letting taxes increase even for the richest Americans will hurt the economy at this crucial time.

More broadly, Mr. Geithner's speech will focus on tax and fiscal policy. According to other excerpts from the speech, Mr. Geithner will say that "ultimately, fiscal policy is about getting the conditions right for economic growth, prosperity, and job creation.

Over the past two decades, Washington ran an experiment on that front. In the 1990s, the government put an end to budget deficits, and America enjoyed a period of growth led by the private sector where prosperity was widely shared and job creation was robust. Over the next decade, Washington tried a new path, running up huge debts, while incomes for most Americans stagnated and job creation was anemic. We are living today with the damage that misguided policy caused.

The speech continues: "So, as we look to a new decade, there's some empirical evidence around what works and what doesn't. Rather than recreating a false prosperity fueled by debt and passing the bills on to the next generation, we need to restore America to a pro-growth tax and fiscal policy, where the middle class once again has a chance to prosper."

After delivering his remarks, Mr. Geithner will participate in a debate with the center's president and CEO John Podesta, Douglas Holtz-Eakin, president of the right-leaning American Action Forum, and others.