Feldstein Says Raising Taxes Could Cause Recession

Harvard University economics professor Martin Feldstein said raising taxes on the wealthiest Americans could push the nation back into a recession and urged that all Bush-era tax cuts be extended for two years.

Feldstein, a member of the committee that dates the beginning and end of recessions, said President Barack Obama’s proposal to allow tax cuts for the wealthy to lapse “is going to slow the economy down and could push the economy into recession again next year.”

“We should extend all of the Bush tax cuts for two years and we will have a clean slate and see where the economy is,” Feldstein said today in a radio interview on “Bloomberg Surveillance” with Tom Keene. “We should commit now to two years -- and nothing beyond the two years.”

Obama wants to extend the tax cuts passed under President George W. Bush for American households earning less than $250,000 and individuals earning up to $200,000. The cuts would be allowed to lapse on Dec. 31 for those earning more.

Feldstein, speaking a day before Federal Reserve policy makers meet, said there’s little more the central bank can do to sustain a recovery from the deepest recession since the 1930s. “The Fed has done a very good job and I don’t think can do more,” he said.