Geithner, Summers hedge on tax hikes

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By Tom LoBianco

Wavering on an emphatic promise he made in the spring, top White House economic adviser Lawrence H. Summers would not rule out middle-class tax increases Sunday as a way for the Obama administration to pay for a sweeping health care plan.

The statement, which was echoed by Treasury Secretary Timothy F. Geithner on Sunday's talk shows, pries open a door to the kinds of broad tax increases that Mr. Obama opposed in his campaign and that he and his advisers have ruled out since taking office in January.

In March, Mr. Summers told CNBC emphatically, "Let's be very clear. ... There are no, no tax increases this year. There are no, no tax increases next year."

On Sunday, however, Mr. Summers, the director of the National Economic Council, was much more circumspect, saying that circumstances change and options cannot be ruled out.

"There is a lot, though, there is a lot that can happen over time," Mr. Summers said when pressed on CBS' "Face the Nation" about whether the Obama administration would raise taxes on the middle class to cover the massive planned expansion of federal health care coverage and the ballooning federal deficits.

"It's never a good idea to absolutely rule things out no matter what," Mr. Summers said, elaborating by saying the administration would not act in ways that would be funded "primarily" by the middle class.

"But what the president has been completely clear on is that he is not going to pursue any of his priorities - not health care, not energy, nothing - in ways that are primarily burdening middle-class families," he said.

Mr. Geithner spoke similarly, declining to rule out broadly based tax increases, when pressed during an interview that aired Sunday. ABC's George Stephanopoulos invited Mr. Geithner five times to rule out raising taxes to pay for health care reform and/or to close the budget deficit - and he never did.

"Again, we're not at the point yet where we're going to make a judgment about what it's going to take," Mr. Geithner said on ABC's "This Week."

When asked about tax increases, "you're not ruling it out, you can't rule it out," Mr. Geithner responded: "I think that what the country needs to do is understand we're going to have to do what it takes. We're going to do what's necessary."

His remarks differed from Mr. Summers' words in March and contradicted what Mr. Obama called "a firm pledge" that no one other than the rich would have taxes raised.

"I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes," he told an audience Sept. 12 in Dover, N.H.

But Mr. Obama also has made health care reform a priority in his first year in office, and congressional gridlock over how to pay for any measure appears to have softened the administration's stance against tax increases.

Republican leaders have used the president's slipping public approval ratings as they resist any legislation that includes a so-called "single payer" option.

Sen. Jim DeMint, a South Carolina Republican who had said health care could become Mr. Obama's "Waterloo" if opponents succeed in stalling and blocking his plans, said the debate is now between Democratic lawmakers and regular Americans.

"What's going to happen is you're going to see Americans take to the street in August and go to their congressmen's office, and they're going to go to town halls, and I think they're going to let congressmen and senators know that they need to keep their hands off their health care," Mr. DeMint said on "Fox News Sunday."

Congress is set to recess at the end of the week for the rest of August, not having passed health care legislation as Democrat leaders originally hoped.

Many lawmakers plan to hold town hall meetings with constituents to gauge their feelings largely on health care, but also on topics including climate legislation and the prospect of another stimulus bill.

Rep. Charles E. Rangel, New York Democrat and Ways and Means Committee chairman, accused Mr. DeMint of absenting himself from negotiations and having no idea what Democrats are proposing.

"And the Republicans and Jim - they have nothing in terms of responding to this very serious need," Mr. Rangel said Sunday on Fox, calling it absurd "for him to have to say that we have a single-payer plan means that he's not aware of the plan that we have in the House, he's not working with the Republicans in the Senate."