Tax cut debate has pundits busy

WASHINGTON, Sept. 2 (UPI) -- Allowing the Bush tax cuts to expire for high-income U.S. families would cut into finances of a high-spending group, a New York economic strategist said.

David Zervos, managing director and head of Global Fixed Income Strategy at Jefferies & Co., said allowing the tax cuts to expire for wealthy individuals would put a drag on the economy, as the wealthiest 3 percent of households are responsible for about a quarter of the nation's consumer spending, CBS News reported Thursday.

That puts Zervos at odds with former Federal Reserve Chairman Alan Greenspan, who said recently he favors tax cuts, but not when government debt is running high.

"I'm very much in favor of tax cuts, but not with borrowed money," Greenspan said on "Meet the Press."

Frequently quoted economist Mark Zandi at Moody's said, "I think if the tax cuts expire for everybody, then we'll be back in recession, no doubt."

The debate in Washington is far from as radical a move as that. President Barack Obama's proposal includes extending the tax cut for couples making less than $250,000 a year and individuals earning less than $200,000 a year.

At the same time, he would allow the tax rate to rise for the highest two income brackets, as provided by the Bush-era tax-cut law.

Zandi said, "I would extend the tax cuts for everyone, at least in 2011. I wouldn't raise the taxes next year when the recovery is so fragile."