Each argument presented is predicated on the idea that the budget deficit is a critical problem that must be addressed, and that the tax cuts are critical element of addressing the deficit. Long-term interest rates on U.S. Treasuries are below 5%, indicating that there is little concern in the markets about the creditworthiness of the U.S. government -- deficits are not worrying the markets, only the politicians. This would imply that it is economically safe to allow all of the tax cuts to continue. Even though there are other causes of deficit -- bailouts and wars in particular -- and other means of addressing the long-run deficit such as health care reform, the Bush tax cuts still accounted for 25% of this year's deficit (Gale, 2010). As such, not extended the tax cuts can have a significant impact on the deficit, in particular when combined with measures to control other contributing costs.

Ultimately, determining the correct course of action with respect to the Bush tax cuts necessitates carefully weighing two needs that are typically viewed as mutually exclusive -- using budgetary measures to stimulate the economy and reducing the deficit. Given that long-term interest rates clearly indicate that markets are not concerned about the deficit, the primary concern must be the economy. The tax cuts therefore should be extended in order to avoid a contraction in demand, critical when the primary problem in the economy today is a lack of demand.

The tax cuts should not be extended, however, for those in the highest tax bracket. While this line in the sand...

Prominent economists on the left and the right are calling for an increase in revenues, yes, but both Keynesians and monetarists realize that transitory revenue increases are more likely to be saved than spent by those with the means to do so. Thus, there is little economic benefit that will be created by extending the tax cuts to the highest income bracket. It is recommended then that this bracket, since it is unlikely to contribute tax cuts to the economic recovery, should contribute to lowering the deficit instead. This requires allowing the Bush tax cuts to the wealthiest tax bracket to expire while extending them for the other 97% of Americans. Only with this strategy is the best balance of economic growth and deficit control achieved.
Works Cited:

Gale, W. (2010) Five myths about the Bush tax cuts. Washington Post. Retrieved December 1, 2010 from http://www.washingtonpost.com/wp-dyn/content/article/2010/07/30/AR2010073002671.html

Haris, L. (2010). Raise taxes now -- the elders of the economy say so. CNN Money. Retrieved December 1, 2010 from http://money.cnn.com/2010/08/09/news/economy/elders_economy/index.htm

Isidore, C. (2010). Economists: Extend Bush tax cuts for everyone. CNN. Retrieved December 1, 2010 from http://money.cnn.com/2010/09/19/news/economy/what_to_do_economists_survey/index.htm

Krugman, P. (2010). Tax cuts and the economy. New York Times. Retrieved December 1, 2010 from http://krugman.blogs.nytimes.com/2010/08/05/tax-cuts-and-the-economy/