05.12.10

Backing Off the Tax Pledge?

White House Budget Director Peter Orszag, grilled about Obama’s pledge not to raise middle-class taxes, left the president wiggle room. Lloyd Grove reports.

Remember President Obama’s supposedly inviolable pledge—repeatedly uttered during the 2008 campaign and at countless town meetings since the inauguration—that he would never raise taxes on middle-class citizens who earn $250,000 a year or less?

This morning at a Manhattan breakfast sponsored by Thomson Reuters, White House Budget Director Peter Orszag threw that pledge out the window. Instead, he described Obama’s “read my lips, no new taxes” pledge as a “stance” and a “preference” that is subject to study by the president’s newly formed bipartisan Commission on Fiscal Responsibility.

“The president has been very clear about what he prefers,” Orszag said under questioning from Thomson Reuters’ Chrystia Freeland. “That was his stance during the campaign, and he still believes that’s the right course forward. But he has also been very clear that we shall let the commission go do its work.”

“It appears that the president’s ‘promise’ is being morphed into a ‘preference,’ ” Hensarling told me.

Freeland followed up, asking if that means the White House might be open to the idea. “Perhaps here’s some give there?”

“I don’t feel like I’m in a position to say that there will be any give there,” Orszag parried. “But the president has been very clear that the commission should go explore whatever options they all deem to be appropriate.”

Later on during the breakfast, Orszag resisted my attempts to pin him down when I asked if the White House could live with a tax increase on the middle class.

“No, I didn’t say that,” he answered. “What I did say is look, the typical thing that’s going to happen, and it’s already been happening, is everyone is going to come along with this idea—the value added tax, this thing under $250,000, Social Security, Medicare changes, what have you—and you’re looking for us to say no, yes, no, yes, no, yes—which will mean that the commission has absolutely nothing to talk about and nothing to do. The president has been very clear that we’re not going to play that game.”

Commission member Jeb Hensarling, a member of the House Budget Committee and a Republican congressman from Texas, told me this morning that Orszag's refusal to reiterate the president’s commitment is a new wrinkle in the debate—and will likely become “a huge issue” in the 2010 midterm elections.

“It appears that the president’s ‘promise’ is being morphed into a ‘preference,’ ” Hensarling told me. “Peter Orszag has one of the toughest jobs in Washington—defending all the spending and the deficit. I like Peter, but the bottom line is you can’t have a lot of the long-term spending projects of the federal government, and knowing we’re going to drown in debt, and not raise taxes, unless you get serious on the spending side.”

Hensarling predicted his fellow Republicans will hit Obama’s apparent willingness to break his no-new-taxes pledge hard, and it will damage the Democrats as November looms.

Correction: This article originally misstated that Rep. Hensarling is a member of the House Ways and Means Committee.

Lloyd Grove is editor at large for The Daily Beast. He is also a frequent contributor to New York magazine and was a contributing editor for Condé Nast Portfolio. He wrote a gossip column for the New York Daily News from 2003 to 2006. Prior to that, he wrote the Reliable Source column for the Washington Post, where he spent 23 years covering politics, the media, and other subjects.