- The Washington Times - Sunday, August 2, 2009

President Obama’s Treasury secretary said on Sunday he cannot rule out higher taxes to help tame an exploding budget deficit, and the president’s chief economic adviser would not dismiss raising them on middle-class Americans as part of a health care overhaul.

As the White House sought to balance campaign rhetoric with governing, officials appeared willing to extend unemployment benefits. With former Federal Reserve Chairman Alan Greenspan saying he is “pretty sure we’ve already seen the bottom” of the recession, Obama aides sought to defend the economic stimulus and calm a jittery public.

Treasury Secretary Timothy F. Geithner and National Economic Council Director Lawrence H. Summers both sidestepped questions on Mr. Obama’s intentions about taxes. Mr. Geithner said the White House was not ready to rule out a tax increase to lower the federal deficit; Mr. Summers said Mr. Obama’s proposed health care overhaul needs funding from somewhere.

Related article: Geithner: Lower deficit is key to recovery

“There is a lot that can happen over time,” Mr. Summers said, adding that the administration believes “it is never a good idea to absolutely rule things out, no matter what.”

During his presidential campaign, Mr. Obama repeatedly vowed, “You will not see any of your taxes increase one single dime.” But the simple reality remains that his ambitious overhaul of how Americans receive health care — promised without increasing the federal deficit — must be paid for.

“If we want an economy that’s going to grow in the future, people have to understand we have to bring those deficits down. And it’s going to be difficult, hard for us to do. And the path to that is through health care reform,” Mr. Geithner said. “We’re not at the point yet where we’re going to make a judgment about what it’s going to take.”

Selling that proposal, however, has proved tricky

“Most private forecasters — and let’s use their judgment — suggest you’re going to see unemployment start to come down maybe beginning in the second half of next year,” Mr. Geithner said, adding those same economists predict positive growth during the second half of this year.

At the same time, Mr. Geithner and other administration officials are contemplating how to ask Congress to extend — again — unemployment benefits for the millions of Americans who have lost their jobs in recent months. The proposal drew measured support from Sen. Jim DeMint, South Carolina Republican.

“We need to take care of those who are unemployed, but we also need to make sure they get jobs,” he said.

Those jobs, though, are still elusive. Mr. Greenspan said the economy is slowly coming back.

“Collapse, I think, is now off the table. We were teetering for a while,” he said.

Mr. Greenspan said he doesn’t think the Federal Reserve should be considering raising interest rates to ward off inflation, although he added that the Fed will have to rein in credit and raise rates at some point.

Mr. Obama’s opponent for the presidency, Sen. John McCain, Arizona Republican, questioned whether the administration’s actions will prove beneficial for the country.

“I think it’s pretty clear, if you pump trillions of dollars into the economy, you will see some recovery,” Mr. McCain said while giving Mr. Obama credit for the improvement. “But the long-term consequences, I think, are going to be, unfortunately, devastating unless we do something about it.”

Mr. Geithner and Mr. Greenspan appeared on ABC’s “This Week.” Mr. Summers appeared on NBC’s “Meet the Press” and CBS’ “Face the Nation.” Mr. DeMint was interviewed on “Fox News Sunday.” Mr. McCain spoke with CNN’s “State of the Union.”

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