The question for you today is which one will win out in President Obama’s decision-making process.
This morning on “This Week with former Clinton adviser and Democrat activist George Stephanopoulous” interviewed Treasury Secretary Timothy “I never realized the housing market had collapsed” Geithner who made a rather stunning “gaffe.” (Using the Michael Kinsley definition of the word: Accidentally telling the truth.)
To get the economy back on track, will President Barack Obama have to break his pledge not to raise taxes on 95 percent of Americans? In a “This Week” exclusive, Treasury Secretary Tim Geithner told me, "We’re going to have to do what’s necessary.”
Geithner was clear that he believes a key component of economic recovery is deficit reduction. When I gave him several opportunities to rule out a middle class tax hike, he wouldn’t do it.
“We have to bring these deficits down very dramatically,” Geithner told me. “And that’s going to require some very hard choices.”
“We will not get this economy back on track, recovery will be not strong and sustained, unless we convince the American people that we are going to have the will to bring these deficits down once recovery is firmly established,” he said.
While Geithner told me, “There are signs the recession is easing,” he warned that, “We have a ways to go.”
“I want to emphasize the basic reality that unemployment is very high in this country,” the secretary said. But, he underlined that the administration is “going to do what is necessary to bring growth back on track.”
What most people are focusing on here is the obvious implication that Obama’s vow not to raise taxes on those making less than $250,000 a year is appearing less like a promise and more like a guideline. Before the end of his first term, Obama is going to face a choice.
He can hold fast to his desire to remake America according to his image of it. He can try creating a country where people aren’t burning coal or oil and all electricity is provided by wind turbines and vast fields of solar cells. He can try creating a health care system where everyone gets substandard care – not just the uninsured. If he chooses this path, he will have to raise taxes on the middle class. He can’t rack up any more debt; the Chinese aren’t buying. So, he will break his promise in such a fashion that not even Politifact.com can spin it.
Or, he can keep his promise on taxes and radically scale back his big government plans.
If he chooses the former, he will have done what Bush 41 did and will share his fate. If he chooses the latter, he has a chance at a second term. It’s unclear right now if Obama shares the same instinct for political self-preservation that President Clinton did – he certainly hasn’t shown Clinton’s moderation.
The second point is the more interesting one: The idea that once the economy starts to get back on solid footing that somehow a tax increase will have no impact on future growth. You’d think that this week’s big news with the so-called “Cash for Clunkers” program would have taught the treasury secretary and the rest of the Obama administration some lessons about how people respond to incentives. Is there any doubt that such a warning of future tax increases won’t have an effect on how quickly and with how much vigor this economy emerges with from the worst recession since the early 1980s?