Gibbs: Obama Won't Raise Middle-Class Taxes
By Michael A. Fletcher
If two of President Obama's top economic advisers cracked open the door to the possibility middle-class tax increases Sunday, the White House slammed it shut on Monday.
Press Secretary Robert Gibbs said President Obama will not raise taxes on Americans earning less than $250,000 a year, even as the nation's budget deficit has surged beyond $1 trillion, a problem that policy makers agree has to eventually be wrestled under control to ensure future economic growth.
During his 2008 presidential campaign, Obama promised not to raise taxes on middle class Americans -- and he intends to keep that pledge, Gibbs said. "The president's clear commitment is not to raise taxes on those making less than $250,000 a year," he said.
Speaking at his daily news briefing, Gibbs responded to remarks made by top economic adviser Larry Summers and Treasury Secretary Timothy Geithner, both of whom seemed to leave open the possibility of middle-class tax increases to bring the deficit under control.
Asked on CBS's "Face the Nation" whether taxes could be raised for middle-income Americans, Summers was non-committal. "There is a lot that can happen over time," he said. "It is never a good idea to absolutely rule things out no matter what."
Geithner, in an interview on ABC's "This Week" program, said restructuring the U.S. health-care system is not enough to rein in the budget deficit under control, and he said tax increases could be necessary. "We can't make these judgments yet about exactly what it's going to take and how we're going to get there," Geithner said.
Gibbs said Obama swiftly put such politically volatile talk to rest during a meeting with his top economic advisers on Monday. He said the president reiterated his commitment to not raising taxes on middle-class Americans, a promise rooted in his belief that the only group of people on average to prosper economically in the past eight years were the nation's top 5 percent of income earners, while the nation's median income flat lined.
Still, the remarks from Obama's top economic advisers drew a sharp rebuke from some Republicans. "Despite the Obama campaign rhetoric, it appears that the White House may do the last thing an economy in recession should do -- increase taxes on middle-income families -- to dig itself out of the hole it's made," said Sen. Chuck Grassley (Iowa), the ranking Republican on the Senate Finance Committee.
With health care costs rising far faster than inflation, the federal deficit is largely being driven by the growing costs of Medicare and Medicaid. But some of Obama's initiatives -- including efforts to make renewable energy profitable, to bolster education, and to remake the health care system in a way that will eventually control costs while extending coverage -- promise to put even more pressure on the deficit.
"I think the president has backed himself into a corner here," said Marc Goldwein, policy director of the bipartisan Committee for a Responsible Federal Budget. "He wants big spending on health care, energy and education. And you can't get that from taxing only the top 5 percent of income earners. That makes it difficult to do tax policy."
While Obama has promised that health care reform could in the long run result in big budget savings, Goldwein said that significant new revenue is also going to be needed to shrink the deficit.
"If the president cares about the deficit and wants to make it a priority, he has to make a major budget deal at some point," he said. "On the table has to be Social Security, health reform, budget cuts and revenue. And it is going to very difficult to get that revenue from just the top sliver of the income scale."
Staff Writer Scott Wilson contributed to this report.
Posted at 5:46 PM ET on Aug 3, 2009
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