Geithner: Raise Capital-Gains Taxes and Taxes on the Rich

Geithner was trying to lay out the White House position in a way to make Democrats appear willing to compromise on the issue, by only allowing taxes on what they call the "very rich" to expire.

Talk about being in two places at once, well Secretary of the Treasury Tim Geithner appeared to be doing just that Sunday, when he delivered the same message on whether or not to keep the Bush tax cuts in two television networks at almost the same time.

Obviously Geithner does not have the power of ubiquity — that is being in many different places at the same time — so obviously one of the interviews was taped, the other one live. Such is President Barack Obama’s concern that his administration deliver the same message on all networks. This time it was on NBC’s Meet the Press and on ABC’s This Week.

For Democrats in Congress the issue is not a simple one to address. For one there is the issue of the name Bush associated with the measure. Then comes the question of whether in the middle of a weak economic recovery Congress is willing to raise taxes on the American people less than three months before the November mid-term elections.

In his interview on This Week on ABC, Geithner said the White House would push to let the Bush tax cuts expire for individuals making more than $200,000 a year and families making more than $250,000.

“What the president’s proposing to do is to leave in place, to extend tax cuts that go to more than 95 percent of working Americans and to leave in place tax cuts that are very important to [incentivize] businesses to hire new employees and to invest in expanding output,” Geithner said.

“We think it’s a very strong package. We think it’s the right package. We think it’s fair. We think it’s responsible,” he said.

When White House correspondent Jake Tapper and temporary host on the ABC program pointed out to Geithner that Alan Greenspan, former chairman of the Federal Reserve, had said that letting the tax cuts expire, which he supports, would slow growth. Geithner disagreed.

“I do not believe it will have a negative effect on growth,” he said.

Last week Greenspan was asked by Congress whether letting the tax cuts expire would depress growth.

“Yes, it probably will, but I think we have no choice in doing that, because we have to recognize there are no solutions which are optimum,” Greenspan said on Bloomberg Television. “These are choices between bad and worse.”

Speaking on NBC News’ “Meet the Press,” Geithner said he supported allowing the top capital gains tax rate to revert to 20 percent. It’s 15 percent now.

Since Geithner’s was the only voice on the issue, it must represent the view of the White House and President Obama.

Sill with such a shaky economy it is uncertain what the Democratic-controlled Congress will do.

The facts are simple and easy to understand. This is the last year for the tax cuts enacted under President Bush. Republicans have generally favored extending all of them. While Democrats are divided on the issue. President Obama, as Geithner said in the two program, favors allowing the expiration of cuts that apply to the wealthiest people in America.

The problem for Democrats in close Congressional elections this year is that many if not most of those who make more than $200,000 a year are small business owners, who in turn are the ones most likely to hire new employees if they are not faced with uncertainty on the economy or on their taxes.

Any move the Democrats make to allow any or all of the Bush tax cuts to expire will be seen by many Americans as a tax increase. And tax increases in the middle of a still shaky economy might push the nation back down into a double dip recession.

Geithner was trying to lay out the White House position in a way to make Democrats appear willing to compromise on the issue, by only allowing taxes on what they call the “very rich” to expire. The problem Democrats in Congress face is that former Federal Reserve Chairman Greenspan told them last week that even allowing those tax cuts to expire might hurt the much-needed economic recovery.

Democrats in Congress are in a bind. They may try to change the name of the tax cuts to avoid having to say they voted to extend a program presented by former President Bush.

But, no matter what they call it, they will have to face the voters in November, and at this point any talk of raising taxes on anyone may hurt the party so much that they might have to swallow hard and extend the program for one or two more years.