To Cut Debt, Obama Shifts on No Tax VowBy JACKIE CALMES
President Obama, still seeking to get Congressional Republicans to join in a bipartisan commission to reduce the federal debt, suggested he would be willing to break his campaign promise against raising taxes on households with less than $250,000 annual income.
“The whole point of it is to make sure that all ideas are on the table,” the president said in the interview on Tuesday with Bloomberg BusinessWeek that the publication released online today. That included not only tax increases, he added, but also spending on the popular government health programs, Medicare and Medicaid, whose fast-growing costs are driving the projections of unsustainable annual deficits in coming years.
“What I can’t do is to set the thing up where a whole bunch of things are off the table,” Mr. Obama said. “Some would say we can’t look at entitlements. There are going to be some that say we can’t look at taxes, and pretty soon, you just can’t solve the problem.”
Budget experts from conservative to liberal have long agreed that future deficits can only be brought under control by a combination of tax increases and spending cuts, especially in the benefit programs. Many of them criticized Mr. Obama during the campaign for promising in effect to exempt 95 percent of Americans from any tax increase; the wealthiest 5 percent, the critics said, cannot shoulder the likely load without harming investment and economic growth.
Last summer, with the recession’s costs having forced deficits above $1 trillion annually on average, Mr. Obama’s spokesman, Robert Gibbs, said the president stood by his campaign promise after the top economic advisers — Lawrence H. Summers and Timothy F. Geithner, the Treasury secretary — suggested the administration was reconsidering in light of the worsened fiscal forecasts.
Now the president has made clear he is willing to reconsider, if Republicans will come to the table to negotiate ways to reduce deficits. But the Republican Party opposes all tax increases, and so the Congressional Republican leaders, Senator Mitch McConnell of Kentucky and Representative John A. Boehner of Ohio, have resisted committing to a bipartisan commission. But neither did they rule it out at a White House meeting on Tuesday, participants say.
At that meeting, Mr. Obama gave the Republicans a paper describing the executive order he is planning for creating a commission. The group would have 18 members, 10 Democrats and eight Republicans. The president would name two of the Republicans along with four Democrats; none would be administration officials. For the remaining 12 members, the leaders of both parties in the House and Senate each would choose three lawmakers.
The commission would be charged with reporting by December — after the midterm elections — on how to balance the budget by fiscal year 2015, not counting federal interest payments on the national debt; those are projected to be nearly 3 percent of the gross domestic product that year, a level that most economists say is about the maximum desirable deficit for any year. Also, Mr. Obama wants a commission to also propose longer term changes in revenues and the entitlement programs to rein in a debt projected to be nearly 80 percent of the economy’s total output by 2020.
While the president cannot force Congress to vote on any package the commission comes up with, the Democratic leaders, Representative Nancy Pelosi of California and Senator Harry Reid of Nevada, have committed in writing to have vote.