White House: 'No middle class tax hike'

Aug 4 2009

"The White House tried Monday to douse speculation that it might raise taxes on the middle class in violation of President Obama's campaign promise, just a day after two of his top economic advisers left the door open to such a move to rein in spiraling deficits," The New York Times reports. "Mr. Obama told his economic team in a meeting at the White House that he intended to stand by his promise not to increase taxes on families making less than $250,000, aides said."

White House and Congressional Democrats have proposed increasing taxes on the wealthiest Americans to help pay for a health care overhaul. But "some critics from the left have suggested that Mr. Obama should not limit tax increases to the rich so that a broader cross section of Americans would be invested in the new health care system, as they are in Social Security and Medicare" (Baker, 8/3).

"The scene underscored the peril of Obama's refusal to endorse specific proposals put forth by lawmakers to pay for a heath care overhaul that extends coverage to the uninsured and achieves the other broad goals he's outlined," according to an analysis by The Associated Press. "Without a firm plan the White House can call its own, Obama has exposed himself -- and the officials who speak for his administration -- to an intense scrutiny of their every word." This could prove problematic this month. "As lawmakers head back to their homes for August, Democrats are facing the prospect of defending a sweeping health care overhaul without having any solid commitment from Obama on how the changes will be financed. And the last thing Democratic lawmakers want is for their town hall meetings on the health care overhaul to be dominated by a debate on whether a middle class tax increase is the best way to pay for the changes Obama wants" (Elliott, 8/4).

The Hill: "Labor unions and liberal activists — a large part of the Democratic base — criticized the administration for going back on one of President Barack Obama's campaign promises. 'It's a pretty important campaign promise,' said Thea Lee, policy director at the AFL-CIO. Lee described the comments as a 'trial balloon' and shift in the administration’s message" (Bolton and Youngman, 8/3).

Bloomberg: "'The president was clear during the campaign about his commitment on not raising taxes on middle-class families,' White House press secretary Robert Gibbs said yesterday. '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'" (Johnston and Brower, 8/4).

Meanwhile, "The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation's plate and struggling to find money to pay the tab," The Associated Press reports in a separate article. "The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion. ... The future of current programs — not to mention the new ones Obama is proposing — will depend largely on how fast the economy recovers from the recession, said William Gale, co-director of the Tax Policy Center" (Ohlemacher, 8/3).