Treasury Secretary Geithner told George Stephanopoulos a smaller federal deficit is vital to sustaining an economic recovery. He said doing that is going to require what he called hard choices. He was asked directly whether he would rule out new taxes and he said, "the country must understand the administration will do," in his words, "what is necessary."
In responding to a question based on this characterization by Treasury Secretary Geithner about whether the president would raise taxes on the middle class White House advisor Larry Summers answered like this.
...of this economy. There is a lot, though, there is a lot that can happen overtime. But the priority right now, so it is never a good idea to absolutely rule things -- rule things out no matter what.
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. That is something that is not going to happen.
Now, actually the president said that 95% of the people would NOT see a tax increase. He didn't say they would primarily not see a tax increase. He was cut and dry. This is a classic Kinsleyan gaffe. Michael Kinsley once famously said that a gaffe is when a politician tells you what they're really thinking.
We all know that Obama's spending priorities can't be financed strictly on the backs of the wealthy. For a while, the president will finance them by borrowing. That's until the enormous debt doesn't become merely an economic albatross but a political one as well. Then, the president will have no choice but to raise taxes on those besides the wealthy.
It was always an absurd dichotomy for the president to propose the biggest increase in government spending since FDR and also proclaim that he would manage to increase taxes only on the wealthiest. Yet, that's what he did and he rode that assertion to the White House.
Of course, now Larry Summers and Secretary Geithner have shined some light on the reality of that assertion just a bit. You can also bet that Republican strategists will be scheming all weekend to figure out just how to use this admission most effectively. With health care reform heading into the crucial month of August, this is exactly the sort of gaffe that can change the dynamic of a debate. In this case, the Republicans already have the upper hand on the debate. So, watch for Republicans to use this gaffe to bury health care reform and wipe out the Democrats' plan entirely.
In fact, they've even telegraphed how they are going to justify this tax increase. They will blame Bush of course. Both Summers and Geithner bemoan the massive deficit they inherited. All their spending will be justified as a response to the recession. Since we can't sustain the massive deficits, they will claim that the middle class will have to bear a burden by having their taxes increased as well. They will bemoan this tough choice but say it's necessary because it is a response to the economic situation they inherited. That's exactly what both Geithner and Summers said today, and you can bet that it's what they will say when taxes really will be raised.