Obama struggling to keep no-tax pledge

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(Agencies)
Updated: 2009-08-04 15:51

WASHINGTON: President Barack Obama is struggling to find a way to pay for an overhaul of the nation's health care system without violating his campaign promise not to raise taxes on the middle class.

US President Barack Obama speaks about the post 9/11 GI Bill at George Mason University in Virginia, August 3, 2009. [Agencies]

Obama's dilemma was highlighted this week when two top economic advisers refused to rule out a middle class tax hike as a possible way to pay the health care overhaul bill or to reduce the rapidly escalating federal deficit. They were quickly overruled by a White House that insisted Obama intends to keep his campaign promise.

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. 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.

For months, Obama has said that controlling rapidly escalating health cares costs is the cornerstone to bringing the federal deficit under control. And he's promised that paying for the changes won't add to the current deficit.

The problem is that his preferred financing alternative - limiting charitable deductions by the wealthiest of Americans - has gained no traction on Capitol Hill. And his nodding acceptance of a House plan to use a surtax on those with incomes above $350,000 has proven a nonstarter in the Senate.

So 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.

It would be a distraction from the already difficult sales job needed for Obama's top domestic priority. Critics have booed and jeered lawmakers at home while political parties and interest groups flood the air with a cacophony of competing ads.

So it was no shock when congressional Democrats quickly phoned the White House for clarification after hearing that Treasury Secretary Tim Geithner and Council of Economic Advisers chief Larry Summers had declined to rule out middle class tax hikes during separate Sunday television talk show interviews.

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

White House Press Secretary Robert Gibbs, peppered with questions about the economists' comments on Monday, insisted Obama intends to keep his campaign pledge not raise taxes on those making less than $250,000. And he said Obama told his economic team as much during a closed-door meeting in the Oval Office.

Ultimately, the decision to propose tax hikes remains with the president, not a government economist or Cabinet official. Obama's position has not changed: New taxes on the middle class are not a politically viable option.

The fallout reminded White House political aides that breaking the president's promise not to raise the middle class tax burden would be blow to his re-election chances in 2012 and would prove noxious to his party in the 2010 midterm elections.

But keeping that option off the table - and out of the August congressional town hall debates over health care - won't be easy unless Obama himself signals to lawmakers in the House and Senate which of the various financing plans he's willing to accept.

So far, he's left that to his aides and advisers. All of them.