Geithner Caught in Tax Flip-Flop

REPORTER: When it comes to corporate tax reform, everyone’s waiting with bated breath. Now a year ago, you testified before Congress and you said that the corporate tax reform would be revenue-neutral. Then, a year later, the Obama administration comes up with the plan and the quote in essence is that the business sector will be asked to contribute to restoring fiscal sustainability to the tune of about $250 billion. What happened between a year ago and now?

SEC. TIM GEITHNER: Good question, thanks for asking it. You know, we’re going to do this in a way that’s responsible, which means we’re going to do it in a way that does not add to future deficits. We just really can’t expect the rest of the individual economy, individuals, to bear more of that burden. So we’re going to do it in a way that does not add to future deficits and our basic principle is, as we lower rates, broaden the base, clean up the system, and strengthen the incentives for investing in this country, we’re going to make sure that the things we preserve are things that [unclear] has to pay for. And that’s the way—that’s what you have to do to make sure it’s not adding to future deficits. It’s a simple, pragmatic, straight-forward conservative principle.

REPORTER: So a year ago, the belief was that there would be revenue-neutral—

GEITHNER: No, it’s no change, again. The principle is that we’re not going to add to future deficits, through tax reform, and we’re going to make sure that the incentives we preserve in the tax system, we can eliminate dozens and dozens of them, but those we preserve, we have to make sure we’re paying for them. Because, again, tax credits aren’t free. And we can’t afford to go out and borrow money to finance those tax cuts, so that’s the basic conservative principle that underpins this whole strategy.