Geithner to World: Relax, We're Raising Taxes

Tim Geithner said something pretty interesting about the Bush tax cuts in his speech yesterday at the Center for American Progress. The Treasury secretary explained why the administration was letting the tax cuts for the wealthiest 2% of Americans expire now. “The world is likely to view any temporary extension … as a prelude to a permanent extension,” he said, which would undermine world confidence in our willingness to reduce future deficits.

Essentially, Geithner revealed that “the tax hike is all about signaling something to the rest of the world,” writes Joe Weisenthal of Business Insider. The idea is that we can only continue our massive deficit spending if the world believes we’ll eventually stop. “It’s the ‘stimulus in the front; austerity in the rear’ plan all over again,” he contends, and if we can’t even raise taxes on the top 2%, it sends the opposite signal: “We’re doomed.”