The adviser says of the alleged conversation: 'Geithner is making it up.' Romney adviser: Geithner's lying

The top economic adviser to Mitt Romney’s presidential campaign on Sunday accused Tim Geithner of “lying” in a forthcoming memoir about a private discussion on tax increases they had during the 2012 race.

R. Glenn Hubbard, the dean of Columbia Business School and the former head of George W. Bush’s Council of Economic Advisers, said Geithner fabricated a claim in the book that Hubbard endorsed raising taxes in a conversation the two men had in early 2012 at an Economic Club of New York dinner.


“He’s going to go out and say what he wants,” Hubbard said in an interview. “It just happens to be a lie.”

In his book, “Stress Test: Reflections on Financial Crises,” Geithner writes that Hubbard complained to him that the Obama administration was not endorsing the Simpson-Bowles deficit reduction plan. “When you guys are willing to raise taxes, we can talk about Simpson-Bowles,” Geithner told Hubbard.

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“Well, of course we have to raise taxes,” Hubbard responded, according to the book. “We just can’t say that now.”

On Sunday, Hubbard said of the alleged conversation: “Geithner is making it up.”

“It’s pretty simple. It’s not true,” Hubbard said when reached by phone.

Hubbard, who said Geithner did not reach out to him before the publication of the book, said he remembers having a conversation about the Simpson-Bowles plan.

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“I was asking him something like, how can Romney’s plan be off base because it’s essentially the Bowles-Simpson structure and Bowles-Simpson actually raises revenue,” Hubbard said. “But I wasn’t suggesting that we’re trying to raise taxes.”

Geithner spokesperson Jenni LeCompte said he stands by his account of the conversation with Hubbard. “Mr. Geithner’s memory on this exchange is crystal clear,” LeCompte said.

“Stress Test” is set to be released Monday. POLITICO obtained an early copy over the weekend.

The spat between the two influential economic officials mirrors the larger debate over whether it is necessary to raise taxes as a way of addressing the country’s debt and deficits. Republicans have largely opposed tax hikes, focusing on deep spending cuts instead.

Hubbard is among the Republican Party’s most highly regarded economists. He was a leading candidate to chair the Federal Reserve under President George W. Bush — Ben Bernanke got the job instead — and was considered a top contender for either Fed chair or Treasury secretary in a Romney administration.

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For Hubbard to describe broad tax hikes as necessary would have been a sharp break from the message of Romney’s anti-tax presidential campaign. In both his 2008 and 2012 runs for the White House, Romney signed the conservative advocacy group Americans for Tax Reform’s pledge not to raise taxes under any circumstances.

Geithner’s account of his conversation with Hubbard also clashes with the economist’s longstanding reputation as a firmly conservative policymaker who helped enact sweeping tax cuts as the head of Bush’s Council of Economic Advisers.

He has advocated in the past for restructuring the tax code, but has consistently spoken out against raising marginal rates. In a 2011 interview with Fortune, Hubbard criticized President Barack Obama for seeking to roll back the Bush-era tax cuts and raise certain rates, though Hubbard allowed that in theory taxes could be “part of the solution” to the country’s deficits and debt.

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“Where President Obama is both disingenuous and feckless even is suggesting that raising marginal rates somehow would have much to do with deficit deduction. The math just doesn’t work,” Hubbard said at the time.

Democrats have scoffed at these arguments by Republicans, noting that the Bush tax cuts produced big deficits after budget surpluses were achieved at the end of the Clinton administration and that the type of spending cuts being advocated by the GOP would gut key government programs.

Hubbard said Sunday that he only anticipates tax increases as a necessary fiscal tool if government spending continues on its current track, calling it “a matter of arithmetic.” Romney had proposed a different spending trajectory than Obama’s as a presidential candidate, so Hubbard never believed that a President Romney would have had to raise taxes.

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“We believed that with our numbers, we would not have to [raise taxes],” Hubbard said. “It’s a misunderstanding or either that, he’s just lying. But it’s not true.”

Hubbard, who has not yet read Geithner’s book, took issue with at least one other part of the memoir.

“I saw some of the excerpts about housing and I must say I split my side in laughter because Tim Geithner personally and actively opposed mortgage refinancing, constantly,” he said. “And now he’s claiming this would have been a great idea in the country. I don’t know how much more ingenuous that is in the book, but that was just a real laugher.”

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