President Obama's Treasury Secretary argued this morning that spending cuts and entitlement reform would hurt the economy more than tax increases on "the top 2 percent" of Americans.
"These revenue increases are focused on the top 2 percent of American taxpayers, not the remaining 98 percent," Treasury Secretary Tim Geithner told the Senate Finance Committee today. "The increases in revenue we propose -- which are roughly one percent, I say one percent of GDP -- if structured as we propose, we believe would not have a material adverse impact on economic growth, particularly if compared to a comparable reduction in, for example, Medicare benefits or spending on infrastructure."
Geithner suggested that national security depends on tax increases. "We proposed tax reforms that raise revenues because we do not believe it is possible to meet our national security needs, to preserve a basic level of health care and retirement security, or to compete effectively in a global economy without some increase in revenues as part of balanced deficit reduction plan," he said.
He also said that Republican proposals to cut spending further would force low-income families into poverty, and similarly rejected tax cuts. "[To cut taxes] would entail deep cuts in benefits for retirees and low-income Americans, cuts in investments and innovation that would hurt growth and economic opportunity, and cuts in defense spending that would damage our national security interests,"he said, before drawing a line in the sand at tax increases. "We do not support and will not support those alternative strategies."