Aug 3, 2009

White House says no to tax hike for middle class

WASHINGTON -- In a rebuke to the Treasury secretary, the White House said Monday that President Barack Obama remains opposed to any tax hike for families earning up to $250,000.

White House press secretary Robert Gibbs restated the assurance after Treasury Secretary Tim Geithner and National Economic Council Director Larry Summers appeared Sunday to leave open the possibility Obama would tap middle-class Americans' income to reduce the deficit or help pay for a health insurance overhaul.

"I'm going to deal with this and I'll do this one more time," Gibbs said after repeated questions from reporters about the differences between the economists and Obama. "The president was clear. He made a commitment in the campaign. That commitment stands."

The conflicting statements from administration economic and political officials illustrate the problem facing Obama: how to find a politically palatable way to pay for the health insurance overhaul he insists is the cornerstone to bringing the rapidly escalating federal deficit under control.

And the mixed signals are coming out of the White House as Congress heads into its August recess and what's expected to be a month-long battle across the country over the direction and financing of the health care plans emerging in the House and Senate.

In their Sunday television interviews, Geithner and Summers sidestepped questions on Obama's intentions about taxes. Geithner said the White House was not ready to rule out a tax hike to reduce 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 pledged "you will not see any of your taxes increase one single dime" and repeatedly said middle-class families would not be effected.

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."

Those comments dominated Gibbs' daily meeting with reporters.

"The president was clear during the campaign about his commitment on not raising taxes on middle-class families," Gibbs said. "And I don't think any economist would believe that in the environment that we're in raising taxes on middle-class families would make any sense, and the president agrees."

Geithner appeared on ABC's "This Week." Summers appeared on NBC's "Meet the Press" and CBS' "Face the Nation."

Australia 'foils suicide attack on army base'

Australian police arrested four people last night who were planning a suicide attack on a military base.

Police said members of a Melbourne-based group had 'been undertaking planning to carry out a terrorist attack in Australia' Photo: EPA

About 400 officers from state and national security services took part in at least 19 predawn raids on properties in the southern city of Melbourne, Victoria state police said in a statement.

Police said members of a Melbourne-based group had "been undertaking planning to carry out a terrorist attack in Australia."

The group was allegedly linked to hostilities in Somalia, the statement said without giving further details.

The Australian newspaper reported those detained were Islamic extremists who had planned to launch a suicide attack on an Australian Army base. Members of the Melbourne group allegedly travelled to Somalia in recent months to train with the extremist group al-Shabaab, and were allegedly planning to use automatic weapons to kill as many soldiers as possible, the newspaper reported, without providing sources for its information.

Police refused to confirm the report or release any further details, but said they would be holding a press conference later Tuesday.

The United States has designated al-Shabaab a foreign terrorist organisation. The US State Department's annual terrorism report in April said al-Shabaab was providing a safe haven to al-Qaida "elements" wanted for the 1998 bombings of the US embassies in Kenya and Tanzania.