Wednesday, September 15, 2010
Taxes must rise while fiscal stimulus needs to be wound down in order to reduce the U.S. budget deficit and allow private investment to expand, said former Chairman of the Federal Reserve Alan Greenspan on Wednesday.
“I am in favor for the first time in my memory of raising taxes,” Greenspan told an audience at the Council on Foreign Relations in New York.
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He warned that the deficit, swollen by massive stimulus spending, was crowding out capital investment. We “must find a way to simmer down fiscal activism and allow the economy to heal,” he said, adding that that stimulus spending had been far less successful than anticipated.
Bush era tax cuts are set to expire at the end of this year. President Obama says he wants to cap taxes on middle and lower income households but allow taxes rates to revert to higher levels for the wealthy.
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