It is no secret President Barack Obama inherited an economy awash with debt and messy internal affairs and, of course, he’ll have to make some radical moves to revamp the infrastructure. But the question is: at whose expense? In his early campaign days, he made grandiose promises of change and a rebirth of the middle class by taxing the rich and cutting taxes for the average everyday citizen.
In recent days, however, two of President Obama’s most valued economic advisors said the middle-class taxes may have to increase in order to pare budget deficits and fund the nation’s health care system makeover, reports the Associated Press.
As quiet as it’s kept, last week bore good news for the U.S. economy as it was announced Sunday, by Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers: The worst recession in the United States since World War II could be on the verge of ending. Even so, officials appeared willing to extend unemployment benefits.
The two economic powerhouses remained mum and vaguely answered questions about the Obama Administrations intentions to raise taxes on the U.S. middle class. Geithner said the White House was not quite ready to completely rule out a middle class tax hike to reduce the budget deficit’ while Summers said the health care overhaul need funding from somewhere.
“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.”
On the presidential campaign trail, Obama pledged, “You will not see any of your taxes increase one single dime.” But in reality, health care reform is a task that cannot be achieved without raising taxes or deepening budget deficits.
“If we want an economy that’s going to grow in the future, people have to understand we have to bring those deficits down. And it’s going to be difficult, hard for us to do. And the path to that is through health care reform,” Geithner said. “We’re not at the point yet where we’re going to make a judgment about what it’s going to take.”
On Friday (July 31) a report was released, detailing the second quarter of the year’s economic status, which appeared much better than expected, falling only 1 percent. The government report confirmed enthusiastic goals of the economic slump nearing its end.
President Obama warned against instant turnaround.
“Well as I’ve said, I think we maybe are beginning to see the end of the recession but it’s still going to be some time before we are seeing companies hiring again, that’s usually the last thing that happens,” Obama said in an interview with Univision that aired on Sunday.
“So I think we are still going to have a tough remainder of the year — probably until next year — but, you know, at least what we are seeing — we’ve pulled back from the possibility of a depression. That’s not the danger.”
And many analysts think the economy is starting to grow again in the current quarter, setting up a long-awaited recovery.
“Most private forecasters — and let’s use their judgment — suggest you’re going to see unemployment start to come down maybe beginning in the second half of next year,” Geithner said, adding those same economists predict positive growth during the second half of this year.