July 24 (Bloomberg) -- The suggestion by some congressional Democrats that the George W. Bush-era tax cuts be allowed to temporarily expire is a “disturbing” position that could send the economy back into recession, U.S. Senator Pat Toomey said.
“It’s disturbing to me that these very prominent folks, knowing that this multitrillion-dollar tax increase would very likely cause a recession” in the current fragile economy, “knowing that it would put hundreds of thousands more Americans out of work, they want to do it anyway,” the Pennsylvania Republican said in a speech today at the Brookings Institution in Washington.
Toomey was responding to a July 16 speech in which Senator Patty Murray, a Washington Democrat, she “absolutely” would prefer to “continue this debate into 2013 rather than lock in a long-term deal this year” that doesn’t include revenue increases Republicans have rejected.
Other Democrats have made similar comments suggesting that the party may be in a stronger negotiating position in January if Congress doesn’t act and the tax cuts expire Dec. 31.
“Frankly I think there’s a certain level of cynicism in thinking that that kind of deception is appropriate or that it fools anybody,” Toomey said.
The Senate is scheduled to vote tomorrow on Democrats’ proposal to extend the Bush-era tax cuts through 2013 for individuals earning less than $200,000 and married couples earning less than $250,000 a year. Tax cuts for income exceeding those levels would lapse.
Toomey said Congress should extend the Bush tax cuts for all income levels through 2013 to give lawmakers time to overhaul the tax code next year.
In addition to the tax cuts scheduled to expire Dec. 31, $1.2 trillion in automatic spending cuts are set to begin in January if lawmakers don’t agree on a plan to replace them.
The nonpartisan Congressional Budget Office said May 22 that allowing the scheduled spending cuts and tax increases to take effect may tip the economy into a recession.
The CBO estimated that the spending cuts and tax increases would total $607 billion, or 4 percent of the U.S. gross domestic product, in the fiscal year starting Oct. 1. The shortfall this fiscal year is projected to be $1.2 trillion.
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