Post by ScottR@KTP on Feb 11, 2010 20:48:56 GMT -5
February 11, 2010, 2:51 pm
To Cut Debt, Obama Shifts on No Tax Vow
By JACKIE CALMES
President Obama, still seeking to get Congressional Republicans to join in a bipartisan commission to reduce the federal debt, suggested he would be willing to break his campaign promise against raising taxes on households with less than $250,000 annual income.
“The whole point of it is to make sure that all ideas are on the table,” the president said in the interview on Tuesday with Bloomberg BusinessWeek that the publication released online today. That included not only tax increases, he added, but also spending on the popular government health programs, Medicare and Medicaid, whose fast-growing costs are driving the projections of unsustainable annual deficits in coming years.
“What I can’t do is to set the thing up where a whole bunch of things are off the table,” Mr. Obama said. “Some would say we can’t look at entitlements. There are going to be some that say we can’t look at taxes, and pretty soon, you just can’t solve the problem.”
Budget experts from conservative to liberal have long agreed that future deficits can only be brought under control by a combination of tax increases and spending cuts, especially in the benefit programs. Many of them criticized Mr. Obama during the campaign for promising in effect to exempt 95 percent of Americans from any tax increase; the wealthiest 5 percent, the critics said, cannot shoulder the likely load without harming investment and economic growth.
Last summer, with the recession’s costs having forced deficits above $1 trillion annually on average, Mr. Obama’s spokesman, Robert Gibbs, said the president stood by his campaign promise after the top economic advisers — Lawrence H. Summers and Timothy F. Geithner, the Treasury secretary — suggested the administration was reconsidering in light of the worsened fiscal forecasts.
Now the president has made clear he is willing to reconsider, if Republicans will come to the table to negotiate ways to reduce deficits. But the Republican Party opposes all tax increases, and so the Congressional Republican leaders, Senator Mitch McConnell of Kentucky and Representative John A. Boehner of Ohio, have resisted committing to a bipartisan commission. But neither did they rule it out at a White House meeting on Tuesday, participants say.
At that meeting, Mr. Obama gave the Republicans a paper describing the executive order he is planning for creating a commission. The group would have 18 members, 10 Democrats and eight Republicans. The president would name two of the Republicans along with four Democrats; none would be administration officials. For the remaining 12 members, the leaders of both parties in the House and Senate each would choose three lawmakers.
The commission would be charged with reporting by December — after the midterm elections — on how to balance the budget by fiscal year 2015, not counting federal interest payments on the national debt; those are projected to be nearly 3 percent of the gross domestic product that year, a level that most economists say is about the maximum desirable deficit for any year. Also, Mr. Obama wants a commission to also propose longer term changes in revenues and the entitlement programs to rein in a debt projected to be nearly 80 percent of the economy’s total output by 2020.
While the president cannot force Congress to vote on any package the commission comes up with, the Democratic leaders, Representative Nancy Pelosi of California and Senator Harry Reid of Nevada, have committed in writing to have vote.
Mr. Obama, in the interview, said “our real problem” is neither the spike in stimulus spending of the last year — as many Republicans charge–or the sharply lower tax collections from hard-hit businesses and individual taxpayers. “The real problem,” he said, “has to do with the fact that there is a just a mismatch between the amount of money coming in and the amount of money going out. And that is going to require some big, tough choices that, so far, the political system has been unable to deal with.”
The president’s tax shift is a gamble not unlike the one the first President Bush took in 1990 when he dropped his “no new taxes” promise to reach a deficit-reduction deal with Congressional Democrats. While that deal gets some credit for the prosperity later in the decade, Mr. Bush lost reelection in party due to the broken promise.
The risks to Mr. Obama were evident in the quick and critical reaction from Republicans’ offices.
A spokeswoman for the Republican National Committee, Katie Wright, circulated to reporters a copy of the Bloomberg Business Week story along with her comment, “So much for those campaign promises not to raise taxes.” And a spokesman for Representative Eric Cantor of Virginia, the second-ranking House Republican, sent an e-mail reprising an Obama quote during the 2008 campaign in which the candidate gave his “firm pledge” against raising “any of your taxes” for families making less than $250,000.
To Cut Debt, Obama Shifts on No Tax Vow
By JACKIE CALMES
President Obama, still seeking to get Congressional Republicans to join in a bipartisan commission to reduce the federal debt, suggested he would be willing to break his campaign promise against raising taxes on households with less than $250,000 annual income.
“The whole point of it is to make sure that all ideas are on the table,” the president said in the interview on Tuesday with Bloomberg BusinessWeek that the publication released online today. That included not only tax increases, he added, but also spending on the popular government health programs, Medicare and Medicaid, whose fast-growing costs are driving the projections of unsustainable annual deficits in coming years.
“What I can’t do is to set the thing up where a whole bunch of things are off the table,” Mr. Obama said. “Some would say we can’t look at entitlements. There are going to be some that say we can’t look at taxes, and pretty soon, you just can’t solve the problem.”
Budget experts from conservative to liberal have long agreed that future deficits can only be brought under control by a combination of tax increases and spending cuts, especially in the benefit programs. Many of them criticized Mr. Obama during the campaign for promising in effect to exempt 95 percent of Americans from any tax increase; the wealthiest 5 percent, the critics said, cannot shoulder the likely load without harming investment and economic growth.
Last summer, with the recession’s costs having forced deficits above $1 trillion annually on average, Mr. Obama’s spokesman, Robert Gibbs, said the president stood by his campaign promise after the top economic advisers — Lawrence H. Summers and Timothy F. Geithner, the Treasury secretary — suggested the administration was reconsidering in light of the worsened fiscal forecasts.
Now the president has made clear he is willing to reconsider, if Republicans will come to the table to negotiate ways to reduce deficits. But the Republican Party opposes all tax increases, and so the Congressional Republican leaders, Senator Mitch McConnell of Kentucky and Representative John A. Boehner of Ohio, have resisted committing to a bipartisan commission. But neither did they rule it out at a White House meeting on Tuesday, participants say.
At that meeting, Mr. Obama gave the Republicans a paper describing the executive order he is planning for creating a commission. The group would have 18 members, 10 Democrats and eight Republicans. The president would name two of the Republicans along with four Democrats; none would be administration officials. For the remaining 12 members, the leaders of both parties in the House and Senate each would choose three lawmakers.
The commission would be charged with reporting by December — after the midterm elections — on how to balance the budget by fiscal year 2015, not counting federal interest payments on the national debt; those are projected to be nearly 3 percent of the gross domestic product that year, a level that most economists say is about the maximum desirable deficit for any year. Also, Mr. Obama wants a commission to also propose longer term changes in revenues and the entitlement programs to rein in a debt projected to be nearly 80 percent of the economy’s total output by 2020.
While the president cannot force Congress to vote on any package the commission comes up with, the Democratic leaders, Representative Nancy Pelosi of California and Senator Harry Reid of Nevada, have committed in writing to have vote.
Mr. Obama, in the interview, said “our real problem” is neither the spike in stimulus spending of the last year — as many Republicans charge–or the sharply lower tax collections from hard-hit businesses and individual taxpayers. “The real problem,” he said, “has to do with the fact that there is a just a mismatch between the amount of money coming in and the amount of money going out. And that is going to require some big, tough choices that, so far, the political system has been unable to deal with.”
The president’s tax shift is a gamble not unlike the one the first President Bush took in 1990 when he dropped his “no new taxes” promise to reach a deficit-reduction deal with Congressional Democrats. While that deal gets some credit for the prosperity later in the decade, Mr. Bush lost reelection in party due to the broken promise.
The risks to Mr. Obama were evident in the quick and critical reaction from Republicans’ offices.
A spokeswoman for the Republican National Committee, Katie Wright, circulated to reporters a copy of the Bloomberg Business Week story along with her comment, “So much for those campaign promises not to raise taxes.” And a spokesman for Representative Eric Cantor of Virginia, the second-ranking House Republican, sent an e-mail reprising an Obama quote during the 2008 campaign in which the candidate gave his “firm pledge” against raising “any of your taxes” for families making less than $250,000.
