Bogan, Chow sign letter supporting Bush tax cuts

The non-partisan National Taxpayers Union drafted the letter, dated Sept. 22. The letter details the group’s opinion on the potential consequences of allowing the tax cuts to expire in January 2011. It argues that increased taxes would burden Americans and that raising taxes during a recession would hinder economic recovery.

President Barack Obama and Congressional Democratic leaders have voiced support for a plan that would extend tax cuts for families making less than $250,000 annually. Republicans in Congress have called for an extension of cuts for all taxpayers. The Obama plan would cost $3 trillion over 10 years compared with current law, while a full extension would cost $3.7 trillion.

Pete Sepp, the executive vice president of the National Taxpayers Union, said that the letter was an effort to challenge the stance of Obama and members of Congress that there is “a reasonable consensus” that the issue of extending tax cuts “can wait or that certain parts of the law can expire. He added that the letter was “as unequivocal as possible.”

Bogan said that it would be “economically unwise” to let all the tax cuts expire.

“And that is not just a right-wing concept,” she added. “It’s basic Keynesian economics: Don’t raise taxes during a recession.”

Chow said that he disliked the “government monkeying around with the tax system when the economy is not good.”

“People depend on the tax rate to make their economic decisions,” he said. “If you say the government can change it anytime, that introduces uncertainty. How can people plan their investments or spending ... if you monkey around with the tax when you feel like it?”

Because income taxes target those who are productive, Chow said that he is in favor of keeping them low. Chow is of the school of economists who favor consumption taxes over income taxes.

“I would like to see the tax cuts extended, not made permanent,” Bogan said. “They should be extended a year at a time for everybody.”

Part of the debate over an end to Bush-era tax cuts has focused on whether tax cuts affecting the wealthiest Americans should be allowed to expire, while those affecting Americans at the middle and lower end of the economic spectrum should be extended.

Bogan said that she doesn’t “think that it sends out a good recovery message” to “single out” the wealthy for a tax increase just because they can afford it.

“I do not think class warfare is the right approach,” Bogan explained. “All of those taxes were higher during the Clinton administration, and we all did just fine.”

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Economics professor Paul Krugman, in a New York Times blog post on Sept. 15, said that extending tax cuts for the wealthiest Americans would be “a bad idea.” He estimated that a 10-year extension of the tax cut for the wealthiest 2 percent of Americans would add $700 billion to the federal government’s budget deficit and would only generate $140 billion in increased consumer spending. He added that if tax cuts were extended for two years, it would add $140 billion to the deficit in exchange for only $28 billion in consumer spending. Senate Majority Leader Harry Reid, D-Nev., has said that the Senate will not debate the issue of extending the tax cuts until after the midterm elections in early November. Speaker of the House Nancy Pelosi, D-Calif., said that while debate concerning the tax increase is not off the table in the House, whether the issue would be addressed before the election depends on the other issues the House will face.

Sepp called the Bush tax cuts “two major legislative achievements of the last decade” and added that he hoped the letter would “provide solid guidance to policymakers.”

Citing the Hawley-Smoot Tariff, which was passed in 1930 and was opposed by more than 1,000 economists at the time, Bogan said that signing the open letter was “a matter of academic integrity.”

“I read it through, I agreed with it, I thought I should put my name on it,” she said. “On what Congress is going to do, I have no more insight than the average person.”

Correction: An earlier version of this article misidentified Gregory Chow as a member of the Class of 1991.