Is President Obama About to Break Promises on Middle Class Tax Hikes?

This is a rush transcript from "On the Record," February 11, 2010. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: And now, President Obama said this over and over and over.


SEN. BARACK OBAMA, D- ILL., PRESIDENTIAL CANDIDATE (CIRCA 2008): Under my plan, no family making less than $250,000 a year will see any form of tax increase - - not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.

If you make less than $250,000 a year, your taxes will not increase one single dime -- not your income tax, not your payroll tax, not your capital gains tax, no tax.

You won't see your taxes increase one single dime -- not your payroll taxes, not your income taxes, not your capital gains taxes, nothing!


VAN SUSTEREN: Well, guess what? Now the president says he's agnostic about raising taxes on families making less than $250,000. So how about you? Are you going to get a tax hike? And could the president survive politically after all the promises he made to the contrary?

Former White House press secretary Dana Perino joins us live. Dana, it does seem the president is softening on the concept of whether or not to raise taxes. Politically deadly?

DANA PERINO, FORMER BUSH WHITE HOUSE PRESS SECRETARY/FOX CONTRIBUTOR: I think so. I mean, just looking at that compilation of clips is very interesting to me because this comment that he is agnostic either means that he doesn't know, or it sounds like he doesn't care. But if you go back to the campaign trail that is just really only 14 months ago, he was using the same phrases over and over again. And all of a sudden, he's agnostic. And I think this could actually end up being one of the biggest flip-flops since the 2004 election.

VAN SUSTEREN: Do you think, though -- he didn't say, Yes, there's going to be an increase in taxes, he didn't say, No, there's going to be -- but he says agnostic. Is he simply floating a trial balloon to see how people are going to respond to it, sort of being the -- sort of the light approach to test the waters?

PERINO: You wonder if it was a chance to, Let's see how people react to it. You know, I've heard some people say that maybe it was a sign to the right to tell them that he won't stand in their way if they want to do tax cuts. I kind of find that hard to believe.

Look, just last week, when you reported on the budget that was released, it had hundreds of millions of dollars of tax increases on it for all Americans -- Americans of all shapes and sizes. But one of the things that's interesting to me is that politically, from a communications standpoint, it's very difficult to have it both ways. You can't be both claiming credit for cutting taxes for 95 percent of the American people while at the same time being agnostic or allowing for tax increases, like the health care bill would have been, even though I don't that's going to pass.

And all throughout the things -- you talk a lot about the cap-and- trade bill on this program. And it's important because while it might be an issue that needs to be debated, we also need to be realistic about the costs, and that would include tax increases for the American people, as well.

VAN SUSTEREN: Dana, last summer, two of his top economic advisers, Larry Summers and Tim Geithner, suggested that the administration may have to reconsider the concept of taxes. And it was -- and with that, Robert Gibbs, the press secretary, came out and said the president stood by his campaign promise, even after his top advisers had said that, but stood by the campaign promise, No new taxes. Is -- Gibbs was freelancing at that point, or is he getting a direction from the president? And to what extent has this become sort of a huge political discussion, do you think, at the White House?

PERINO: It's very hard to say, and I think that's one of the reasons that Americans -- the American people are so hesitant about being confident in the me, especially those that try to create jobs from their businesses. One of the biggest concerns in a downturn of an economy, like we've had the past two years, where we had slow job growth, is because people aren't certain about what's going to happen.

Now, as a former press secretary, I can imagine that having heard the president use the word "agnostic" -- if it was planned, it's one thing. It's a trial balloon, and they'll have to deal with the consequences of it. But if it was just something that he said off the cuff and then it becomes this big story, I can imagine it gave people a little bit of heartburn, and now they're going to have to deal with the aftereffects of it.

VAN SUSTEREN: All right, suppose that it is (INAUDIBLE) an off-the- cuff remark, inadvertent, a slip, it wasn't a test -- it wasn't a trial balloon. Now what's the damage control? Because everybody's seizing upon that because he made it very plain that this was one of his campaign promises.

PERINO: I have no idea how they fix it. Thankfully, that's not my job anymore! But I think this is a bigger deal than they probably think, and it comes at a really tough time for them -- losing in Massachusetts, the health care bill falling apart, climate change isn't going anywhere, and they're going to face major losses in the 2010 election. So it's good year to be a Republican and a very tough year to be a president that is not exactly sure how he wants to take -- what direction he wants to take the country in.

VAN SUSTEREN: Dana, thank you.

PERINO: Thank you. Good to see you.

VAN SUSTEREN: Nice to see you.

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