“What is most important at this point is new jobs and that is why the president is focused on giving a tax credit for new hiring,” Summers said in the interview.
Continue Reading Below
Summers said the $8,000 tax incentive for first-time homeowners has served as a catalyst for that important sector and that similar incentives for business owners should also be helpful.
Investments in the energy sector and in infrastructure are also “important priorities” for the administration as it ramps up its effort to create jobs, he said.
Proposed tax increases on America’s wealthiest will be more than offset by tax cuts for families who do most of the spending in the U.S., according to Summers.
“The president’s not proposing anything more than what current law provides. In fact, relative to current law, what the president is proposing is a very large tax cut for the vast majority of American families, more than 95% of American families,” he said regarding the administration’s tax policies.
Obama is considering letting expire some tax breaks for the wealthiest Americans approved under the Bush administration. Obama’s critics say raising taxes during an economic recovery is bad fiscal policy.
Defending Obama’s policies, Summers said the administration is focused on putting extra spending money back into consumers’ pockets, and tax incentives that promote hiring is the best way to do that.
“Those are the ways that the president believes tax policy can have the greatest impact on demand and I must say almost all economists that have studied these things take that kind of view and would favor supporting current law augmented by a whole range of tax cuts directed at those who are the most likely to spend. That’s the president’s approach,” he said.