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Avoiding a Tax Increase

Friday, 11 Sep 2009 | 3:46 PM ET

During a town-hall meeting with CNBC, Treasury Secretary Timothy Geithner wouldn’t give CNBC a definitive answer on whether a tax increase would be needed to reduce the US budget deficit. Cramer on Friday wasn’t taking any chances, so he used Stop Trading! to offer up a couple of defensive plays just in case it does happen.

Stop Trading, Listen to Cramer!
Mad Money host Jim Cramer shares his stock picks with CNBC's Erin Burnett.

Probably the best option, Cramer said, was to buy municipal bonds. They have had a good run, though, so investors should wait for them to pullback first.

Also, investors should look for master limited partnerships. Companies like Kinder Morgan Energy Partners and Enterprise Production Partners pay out significant dividend yields and enjoy tax-favored status.

Lastly, Cramer urged the government to sell its own bonds as a way to avoid raising taxes.

“They should be issuing $1 trillion in 30-year [Treasurys] right here, right now,” he said.

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

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