2 officials won't rule out tax hike

WASHINGTON - President Obama's treasury secretary said yesterday that he cannot rule out higher taxes to help tame an exploding budget deficit, and his chief economic adviser would not dismiss raising them on middle-class Americans as part of a health-care overhaul.

As the White House sought to balance campaign rhetoric with governing, officials appeared willing to extend unemployment benefits. With former Federal Reserve Chairman Alan Greenspan saying 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.

Treasury Secretary Timothy Geithner and National Economic Council director Larry Summers both sidestepped questions on Obama's intentions about taxes. Geithner said the White House was not ready to rule out a tax hike 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," Summers 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 repeatedly vowed "you will not see any of your taxes increase one single dime." But the simple reality remains that his ambitious overhaul of how Americans receive health care - promised without increasing the federal deficit - must be paid for.

"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."

The president cautioned against expectations of an instant turnaround, though.

"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 yesterday.

Geithner and other administration officials are contemplating how to ask Congress to extend - again - unemployment benefits for the millions of Americans who have lost their jobs in recent months. The proposal drew measured support from Sen. Jim DeMint (R., S.C.), as long as the benefits are drawn from the already-approved economic-stimulus package.

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

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.