Obama reasserts middle class won't see tax rise

By BY KATE ANDERSEN BROWER AND NICHOLAS JOHNSTON BLOOMBERG NEWS

Posted: August 4, 2009 at 6:43 a.m.

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WASHINGTON — President Barack Obama is standing by his pledge to not raise taxes on middle-income Americans even as the U.S. struggles with budget deficits, his spokesman said.

"The president's clear commitment is not to raise taxes on those making less than $250,000 a year," White House press secretary Robert Gibbs told reporters Monday.

Gibbs was responding to questions about remarks made Sunday by Obama's top economic advisers that the government needed to bring deficits under control.

Treasury Secretary Timothy Geithner, in an interview on ABC's This Week program, said that overhauling the U.S.

healthcare system won't by itself bring the deficit under control. He left open the possibility that additional revenue may be sought through tax increases.

"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.

Lawrence Summers, head of Obama's National Economic Council, in a separate interview also left the door open to a possible tax increase. "It is never a good idea to absolutely rule things, rule things out no matter what," he said on CBS's Face the Nation program Sunday.

Obama pledged during his 2008 presidential campaign not to raise taxes on anyone making less than $250,000. The issue has been revived by the debate in Congress over how to pay for the health-care system revamp.

"The president was clear during the campaign about his commitment on not raising taxes on middle-class families," Gibbs said. "And I don't think any economist would believe that in the environment that we're in raising taxes on middle-class families would make any sense. And the president agrees."

The subject came up "as an issue" at this morning's meeting between Obama and his economic team, including Geithner and Summers, Gibbs said.

The health-care plan the administration is trying to get passed by Congress is projected to cost about $1 trillion over the next decade. The U.S. budget deficit is projected to rise to a record $1.84 trillion this year and $1.26 trillion next year.

As one way to pay for the health-care measure, the House Ways and Means Committee last month approved a surtax on annual incomes of more than $350,000 for couples, with the rate rising for households making more than $1 million a year.

The federal budget is being squeezed by the recession, which figures released by the Commerce Department last week show has been the worst since the Great Depression. That has caused tax revenue to drop and outlays for programs such as unemployment compensation to rise.

Gibbs said the Labor Department is likely to report this week that more jobs were lost in the U.S. last month and the unemployment rate will "tick up." The national jobless rate was 9.5 percent in June.

Front Section, Pages 3 on 08/04/2009

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