Obama Says Everything on Table to Reduce Deficit; White House Says President ‘May Not’ Break Tax Pledge

By Fred Lucas | April 28, 2010 | 7:07 PM EDT

President Barack Obama waves goodbye as he boards Air Force One to leave the Quincy Regional Airport on Wednesday, April 28, 2010, in Quincy, Ill. (AP Photo/Adam Gerik)

(CNSNews.com) – Everything must be on the table to reduce the massive federal deficit, said President Barack Obama on Tuesday. However, Obama did not address his campaign pledge to not raise taxes on households earning less than $250,000, and White House Press Secretary Robert Gibbs said the president “may not” break that pledge.
In a speech launching his National Commission on Fiscal Responsibility and Reform from the Rose Garden at the White House, Obama said no proposal should be ruled out, and he also criticized the news media.
“I’ve said that it’s important that we not restrict the review for recommendations that this commission comes up with in any way,” said the president. “Everything has to be on the table.”
Standing by Obama during the speech were the commission’s co-chairmen Alan Simpson, a former GOP senator from Wyoming, and Erskine Bowles, former chief of staff to President Clinton.
“I just met briefly with the commission and said the same thing to them,” said Obama. “Of course, this means all of you, our friends in the media, will ask once a week or once a day, about what we’re going to rule out or rule in, when it comes to the recommendations of the commission.”
“That’s an old Washington game,” he said, “and it’s one that has made it all but impossible for people to sit down and have an honest discussion about putting our country on a more secure fiscal footing. So I want to deliver this message today, we’re not playing that game.”
The previous day, a reporter had implied that the president may be breaking his campaign tax pledge and White House Press Secretary Robert Gibbs responded, “And he may not” break that pledge.
The 18-member commission, made up of 10 Democrats and eight Republicans, held its first meeting on Tuesday. It was created by an executive order from Obama on Feb. 18. Obama’s budget proposal for fiscal year 2011 creates a deficit of $3.8 trillion, or about 10 percent of GDP.
The national debt is projected to reach $20.3 trillion by 2020, almost 90 percent of the Gross Domestic Product, according to the Congressional Budget Office.
The fiscal commission is charged with reducing the deficit to $550 billion by 2015, or about 3 percent of GDP. The commission must have a vote of 14 out of 18 members agree on official recommendations, with a deadline of Dec. 1, which comes after the 2010 mid-term congressional elections.
“This is going to require people of both parties to come together and take a hard look at the growing gap at what the government spends and what the government takes in revenue,” Obama said. “It will require that we put politics aside, that we think more about the next generation than the next election.”
Federal Reserve Chairman Ben Bernake spoke to the panel in attendance, warning that increasing deficits could push interest rates higher and make it tougher for the United States to service debt payments.
“The path forward contains many difficult trade-offs and choices, but postponing those choices and failing to put the nation's finances on a sustainable long-run trajectory would ultimately do great damage to our economy,” Bernanke said.
During the 2008 presidential campaign, Obama said, “And I can make a firm pledge: Under my plan, no family making less than $250,000 will see their taxes increase – not your income taxes, not your payroll taxes, not your capital gains taxes, not any of your  taxes.”
During an exchange between Gibbs and reporters on Monday, a reporter asked, “Is his charge to them still that everything is on the table, from Social Security to – ”
Gibbs answered, “See, this is – I get to do my now weekly thing, which is all of you are now – you’ve gripped your computers and your Blackberrys to quickly Twitter that Robert Gibbs, per the Washington game, didn’t rule out that Barack Obama has said X, Y, Z is on the table. Again, I appreciate this. Apparently it keeps us all quite busy. We can tweet, Twitter, but I would simply say – ”
Another reporter asked, “You really don’t see the significance of that?”
Gibbs said, “I’m glad I got somebody to play along with my Washington game.”
The same reporter then asked, “The president is saying that he may break his most fundamental promise, and that’s a big deal.”
“And he may not,” said Gibbs. “Story at 11:00 p.m.”
With regards to taking nothing off the table, Rep. Ed Royce (R-Calif.) told CNSNews.com that it could lead to a value-added tax (VAT).
“It not only includes breaking his pledge on raising taxes, but it also includes a nod in the direction of a value added tax,” said Royce, not a member of the commission. “Part of the difficulty of a VAT in the U.S. is the sheer amount of the compliance cost for small business. The amount of bureaucracy would decrease American productivity. The inefficiencies of this would impose a deep cost to the economy.”
With a VAT, products and services are taxed at every step of production whenever value is added to them, such as when rubber is processed and then turned into a tire, and so on down the line to the tire store where it is sold to the customer.
“On the other hand, I can understand why the Democrats would entertain a VAT, because of its ability to raise massive amounts of taxes,” Royce said. “The real advantage from the standpoint of politicians is that it’s not transparent. It’s a hidden tax.”
Obama again reminded the public that “the day I walked into this door at the Oval Office, the deficit stood at $1.3 trillion,” after the policies of the Bush administration.
However, he accepted responsibility for running up the debt, under what he said were emergency circumstances.
“The emergency measures have added about $1 trillion to the deficit over the next 10 years,” Obama said. “As a result, even as we take these necessary steps in the short term, we have an obligation to future generations to address our long-term structural deficits, which threaten to hobble our economy and leave our children and grandchildren with a mountain of debt.”