WASHINGTON Oct 11 President Barack Obama's
former economic aide, Larry Summers, said on Thursday that the
payroll tax break for 160 million Americans should be extended
in order to help promote economic growth.
The payroll tax, which funds the federal Social Security
retirement program, is set to revert to 6.2 percent from 4.2
percent at the end of the year.
"This is not the right moment to repeal the payroll tax
cut," Summers told the Center for American Progress think tank.
"It is $120 billion that enables cash-strapped families to spend
money on what they need and provides incentives certainly for
small businesses and perhaps beyond," he said.
Summers said it was critical to spur growth and increase
demand and warned that the country was still at risk of a "lost
decade" of the "great stagnation."
Another set of tax breaks for all Americans are set to
expire at the end of the year and government spending is
expected to shrink - a combination of financial shocks often
referred to as the fiscal cliff.
Summers, who was Obama's top economic adviser until November
2010 and a treasury secretary under President Bill Clinton, said
if all the fiscal stimulus were to be suddenly withdrawn, the
consequences would be dire. Summers, the business community and
policymakers have warned that the higher taxes and sharp cuts in
government spending will push the U.S. economy back into
"It is essential that we avoid falling over that cliff,"