WASHINGTON -- With time running out for Congress to act on the expiring Bush tax cuts, a vocal group of sober-minded economists are raising concerns again about the need to find sources of revenue to chip away at the debt. Among them is one former member of the Obama administration, who made the argument on Monday that a presidential veto might be the silver bullet needed.
In a speech before the Jewish Community Center in New Haven, Connecticut on Monday, former Office of Management and Budget Director Peter Orszag reiterated his preference for a resolution to the current tax cut debate. Extend all the rates for the next two years to alleviate economic suffering. After that, allow all those rates to expire, Orszag said.
But in a new wrinkle on the expected political process, the former OMB header argued that Obama would have to draw a firm line in the sand after those two years expired. If Congress passed another extension of the Bush tax cuts, the responsibility would fall on the president to veto it. That way, the threshold for extending the rates even further would go from 60 senators to 67 (the number needed to override a veto). To look at it through a different lens: only 34 senators would be needed to back Obama and allow the rates to revert to pre-Bush levels.
"There is no other 34-vote strategy for that big of a (necessary) revenue increase," Orszag told The Huffington Post.
The strategy is, if nothing else, based on some relatively uncertain premises. In two years, Obama may be on his way out of the White House with an incoming Republican president much more sympathetic to low tax rates. Both the current president and Congress, meanwhile, seem committed to the idea that the current rates for those families making under $250,000-a-year should be extended indefinitely -- a position they seem unlikely to drop in over the next two years.
The best bet for Orszag, indeed, seems to be for Congress to pass a two-year extension of the current rates for the rich, after which Obama would veto any continued extension. That would also force 67 senators to override his veto. But it wouldn't adequately address what the former OMB header and others see as a major developing problem with respect to a lack of tax revenues coming into the government.