In a speech to the progressive think tank, The Third Way, House Majority Leader, Steny Hoyer (D-MD) told the audience that increases in taxes to the middle class may be coming. With the Bush tax cuts ending in January, there had been talk of extending the cuts to the middle class. But with out of control spending programs, massive debts and declining revenues, Hoyer says that taxes will likely rise. Currently, the Bush tax cuts saves the average middle class household about $2,000 a year.

Hoyer said “As the House and Senate debate what to do with the expiring Bush tax cuts in the coming weeks, we need to have a serious discussion about whether we can afford to permanently extend them before we have a real plan for long-term deficit reduction.” Hoyer proposes a mix of spending cuts and tax increases to lower budget deficits. He favors cuts in defense and increasing the retirement age for Social Security. However, Hoyer also wants to expand and create “more progressive Social Security and Medicare benefits and a stronger safety net for Americans who need it most”.

During the 2008 campaign, candidate Obama vowed repeatedly to not raise taxes on the middle class “by one thin dime”. But the fiscal chaos in Washington with whole new spending programs like the Obama health care law, bailouts for banks, Wall Street and possibly states and unions are putting the nation deeper in debt. Public employee pension plans are bankrupting many states and are expected to raise more problems with Federal pensions as well. A crisis of ‘unfunded liabilities’ may unravel the U.S. economy.

House Minority Leader, John Boehner (R-OH) said yesterday that Hoyer is admitting “that he supports raising taxes on the middle class”. He also said of the sudden resignation of OMB director, Peter Orszag, the he “flees the rising tide of red ink, it’s time to be honest with the American people”. Congress Jeb Hensarling (R-TX) spoke of the lack of a budget for 2011, saying “The Democrats refuse to bring a budget to the floor because they want no limit on what they can spend, not even a speed bump on the way to national bankruptcy.”

There has been talk on Capitol Hill that a budget for 2011 may be postponed until after the November elections. A budget is required by a 1974 rule to be submitted no later than April 15th of each year. Subject to the PAYGO rules, Democrats know they cannot submit a budget without dramatic spending cuts if they want to limit next year’s deficit to a mere $1 Trillion dollars. Even if tax rates were increased to 100% on the rich, the top 10% of the population, they would still fall short of delivering a balanced budget. Without spending cuts the Democrats will have no choice but to raise taxes on the middle class just as Steny Hoyer proposes doing.