Geithner won’t rule out tax rise

WASHINGTON -- Treasury Secretary Timothy Geithner said yesterday that he could not rule out higher taxes to help tame an exploding budget deficit.

Geithner spoke as his chief economic adviser, National Economic Council Director Larry Summers, spoke in the same vein, saying he would not dismiss raising taxes on middle-class Americans as part of a health-care overhaul.

With former Federal Reserve Chairman Alan Greenspan saying yesterday that he is "pretty sure we've already seen the bottom" of the recession, Obama aides sought to defend the economic stimulus and calm a jittery public.

Geithner and Summers both sidestepped questions on Obama's intentions about taxes. Geithner said the White House was not ready to rule out an increase to lower the federal deficit; Summers said Obama's proposed health-care overhaul needs funding from somewhere.

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

During his presidential campaign, Obama vowed repeatedly that "you will not see any of your taxes increase one single dime." However, Geithner said, "If we want an economy that's going to grow in the future, people have to understand we have to bring those deficits down. . . . We're not at the point yet where we're going to make a judgment about what it's going to take."

On another matter, Geithner and other administration officials appeared to be willing to extend unemployment benefits. They are contemplating asking Congress to extend -- again -- unemployment benefits for the millions of Americans who have lost their jobs in recent months.

The proposal drew measured support yesterday from Sen. Jim DeMint, R-S.C.

"We need to take care of those who are unemployed, but we also need to make sure they get jobs," he said.

Those jobs, though, still are elusive. Greenspan said the economy is coming back slowly.

"Collapse, I think, is now off the table. We were teetering for a while," he said.

Greenspan said he doesn't believe the Federal Reserve should be considering raising interest rates to ward off inflation, although he added that the Fed will have to rein in credit and raise rates at some point.

Obama's opponent for the presidency, Sen. John McCain, questioned whether the administration's actions will prove beneficial for the country.

"I think it's pretty clear, if you pump trillions of dollars into the economy, you will see some recovery," the Arizona Republican said while giving Obama credit for the improvement. "But the long-term consequences, I think, are going to be, unfortunately, devastating unless we do something about it."

Geithner and Greenspan appeared on ABC's "This Week." Summers appeared on NBC's "Meet the Press" and CBS's "Face the Nation." DeMint was interviewed on "Fox News Sunday." McCain spoke with CNN's "State of the Union."