Ex-budget chief differs with Obama on US tax cuts

WASHINGTON, Sept 7 (Reuters) - U.S. tax cuts should be extended for all Americans to help spur the economy, but even the middle-class cuts should end in two years, former U.S. budget director Peter Orszag said on Tuesday.

Orszag's views differed from those of his old boss, President Barack Obama.

Orszag, who stepped down in July as Obama's budget chief, said the United States faces a "jobs deficit" near term and fiscal shortfalls that are unsustainable longer term.

"In the face of the dueling deficits, the best approach is a compromise: extend the tax cuts for two years and then end them altogether," he wrote in the New York Times.

In the column, Orszag agreed with Obama's long-held position that it would be better to extend President George W. Bush's tax cuts only for the middle class.

But he said it may be necessary to also extend cuts on the wealthiest Americans in order to get a deal.

"Ideally, only the middle-class tax cuts would be continued for now. Getting a deal in Congress, though, may require keeping the high-income tax cuts, too. And that would still be worth it," Orszag said.

Obama supports a permanent extension of the middle-class tax cuts.

But Orszag said extending the cuts permanently is not affordable.

"Let's continue the tax cuts for two years but end them for good in 2013," he said.

White House spokeswoman Amy Brundage, responding to Orszag's article, said Obama has been "clear about his support for extending tax cuts for the middle class and about ending the tax cuts for the wealthiest 2 percent of Americans."

The Obama administration has advocated maintaining the tax cuts for most Americans, but letting them rise for individuals making more than $200,000 and couples making more than $250,000.

Ahead of the congressional elections on Nov. 2, Republicans are criticizing Obama's Democrats for opposing an extension to the cuts on wealthier Americans, saying doing so would end up hurting small businesses, whose earnings are often taxed through the income-tax code rather than under the corporate rate. (Writing by Caren Bohan; Editing by Leslie Adler)