Geithner: New Taxes Might Be Needed to Revive Economy

The federal government is prepared to do whatever it takes, including raising taxes, in order to revive the economy, Treasury Secretary Timothy Geithner told ABC’s George Stephanopoulos on his Sunday morning news show this morning.

POLITICO reports the conversation in this transcript:

STEPHANOPOULOS: I know you believe that passing health care is central for getting the deficit under control. But independent analysts say even with that you are going to need to find new government revenues. The former deputy Treasury Secretary Roger Altman said it is no longer a matter of whether tax revenues should increase but how. Is he right?

GEITHNER: George it is absolutely right and very important for everyone to understand we will not get this economy back on track, recovery will not be strong enough to sustain unless we can convince the American people that we’re going to have the will to bring these deficits down once recovery is firmly established. Remember we inherited a $1.3 trillion deficit. The cumulative consequences of the policies this country pursued over the last eight years left us with $6 million of more debt than we would have had by making a bunch of commitments to cut taxes and add to spending without paying for those. We are not going to be able to afford to do that. And it is very important that people understand that. Our first priority now though is to get this economy back on track, make sure this financial system is repaired. Without that, we’re not going to get our deficits under control and the necessary path to fiscal responsibility, the necessary path to getting this country living within our means again is not just health-care reform, to bring down those costs, but we’re going to a range of other things and that’s going to be a very difficult challenge for this country. We can do this, it just requires the will to act.

STEPHANOPOULOS: Including new revenues?

GEITHNER: Well, we're going to have to look at - we're going to have to do what's necessary. Remember the critical thing is people understand that when we have recovery established, led by the private sector, then we have to bring these deficits down very dramatically. We have to bring them down to a level where the amount we're borrowing from the world is stable at a reasonable level. And that's going to require some very hard choices. And we're going to have to do that in a way that does not add unfairly to the burdens that the average American already faces.

STEPHANOPOULOS: But that’s the dilemma, isn’t it?

GEITHNER: That is the dilemma.

STEPHANOPOULOS: Because when you look at health-care reform again – I know you believe it’s going to bend the cost curve over time. But the Congressional Budget Office says, at best, the health-care reform plans out there are going to be deficit-neutral over the next 10 years. So to bring the deficits down, there is not enough money in the discretionary budget, we all know that. That means more revenues. The president has said that taxes won’t go up for any Americans earning under $250,000, but it doesn’t appear that he’s going to be able to keep that promise if you’re going to bring the deficits down.

GEITHNER: George, we can’t make these judgments yet about what exactly it’s going to take and we’re going to get there. But the very important thing, and no one is going to care about this more than the president of the United States, is for people to understand that we do not have a choice as a country, that if we want an economy that is going to grow in the future, people have to understand that we have to bring those deficits down. And it's going to difficult - hard for us to do and the path to that is through health-care reform. But that's necessary but not sufficient. We [are] going to do some other things too.

STEPHANOPOULOS: So revenues are on the table, as well?

GEITHNER: Again, we're not at the point yet where we're going to make a judgment about what it's going to take. But the important thing…

STEPHANOPOULOS: But you're not ruling it out, you can't rule it out.

GEITHNER: I think what the country needs to do is understand we're going to have to do what it takes, we're going to do what's necessary.

Obama Admits Saddleback Abortion Answer Was Probably Too Flip

Sen. Barack Obama told George Stephanopoulos during a taping of "This Morning" that he regrets his answer to Rick Warren on the question concerning abortion and the definition of human life, saying it was probably too flip. During the Saddleback Forum last month, he said that "that whether you're looking at it from a theological perspective or a scientific perspective, answering that question with specificity, you know, is above my pay grade."

Today, he said, “What I do know is that abortion is a moral issue, that it's one that families struggle with all the time. And that in wrestling with those issues, I don't think that the government criminalizing the choices that families make is the best answer for reducing abortions.

“I think the better answer — and this was reflected in the Democratic platform — is to figure out, how do we make sure the young mothers, or women who have a pregnancy that's unexpected or difficult, have the kind of support they need to make a whole range of choices, including adoption and keeping the child."

The interview will be televised this morning on ABC.

On other questions, he said that he does not believe Alaska Gov. Sarah Palin has a resume that would prepare her for the job of vice president.

He also talks about considering joining the military as a young man.

“You know, I actually did,” the presidential candidate said. “I had to sign up for Selective Service when I graduated from high school. And I was growing up in Hawaii. And I have friends whose parents were in the military. There are a lot of Army, military bases there.

“And I actually always thought of the military as an ennobling and, you know, honorable option. But keep in mind that I graduated in 1979. The Vietnam War had come to an end. We weren't engaged in an active military conflict at that point. And so, it's not an option that I ever decided to pursue.”

He also had a gaffe moment. In an obvious slip of the tongue, he talks about his Muslim faith. While clearly he just misspoke, it could cause some problems for his campaign down the road with the Internet-rumor-spreading crowd.

Should Palin Step Aside?

Republican Party insiders are reeling over the cloud storms that have gathered over John McCain's decision-making process in choosing Sarah Palin as his running mate. While the party is unified in her defense concerning the controversial pick, George Stephanopoulos of ABC News wrote this morning that there are three questions the party faithful are asking themselves at the convention:

1) What else is out there about Palin? Monday brought the announcement that Palin's 17-year-old daughter is pregnant; news that Palin was once a member of the fringe Alaska independence party; and the revelation that Palin's husband was arrested for a DUI in the 1980s. The news about Palin has continued to come this morning, with the Washington Post reporting that Palin hired a lobbying firm during her time as the mayor of Wasilla, Alaska, to lobby for millions in earmarks for the small town.

2) Was the vetting process complete and professional? Reports in Tuesday's New York Times and Alaska Daily News both suggest the McCain campaign's vetting of Palin was swift and superficial, although the McCain campaign continues to insist that Palin was thoroughly and professionally vetted.

3) And most significantly, what message will voters hear about McCain's judgment that he chose someone to be his running mate who has almost no national security experience and who is so much of an unknown quantity?

The answers to these questions could be deal-breakers, not only for Palin's political future but for John McCain's chances in the election.

For question No. 1, if there are no new revelations, she should survive the political storm. A DUI by her husband two decades ago is nothing to be concerned about. And despite the left's insistence that Palin is a hypocrite because of her stance on family values, evangelicals and social conservatives will see her actions in her daughter's pregnancy as a sign that she lives what she believes. That is, life is sacred at conception.

In regards to question No. 2, there is no real answer. Who is to say what is required in the vetting process? A presidential candidate can request thousands of documents from a potential vice presidential pick but there is always a chance something will fall through the cracks.

But question No. 3 might have produced the most damage for McCain. Clearly, this is a window into his decision-making process and ultimately his judgment. When Americans make their decision this fall, they will want someone in the Oval Office they can have confidence in to make the right call. Rash judgments and ill-advised decisions could lead to disaster for a president. McCain's reputation has clearly suffered in this regard. Palin may be the right person for the vice presidency, but her selection is seriously degrading McCain's chances in being elected. McCain may be forced to ask her to step aside. He could spin it by saying with new revelations, it's become clear that it's time for a midstream adjustment. She could say that she has decided for the good of her family and the party she is not going to run.

One thing is clear, if a move is to be made, it has to be soon, and that means during the convention. That would give him and the party time to recover from this political mistake, and rebuild his reputation for someone who normally has sound judgment.