Treasury Secretary Tim Geithner recently told CNBC that the Obama administration intends to hold the top tax rate on capital gains and dividends to 20 percent. This could be a politically shrewd gesture to reassure investors that the president is on their side, yet there is a small problem: keeping the top tax rate at 20 percent will mean a revenue loss of $138 billion over the next ten years. For conservatives, there is an easy solution to this dilemma: cut government spending. To give an example, slashing foreign aid by half over the next decade — not a policy I’d recommend, but one that would resonate with voters — might make up for the revenue loss. But given that the Obama White House intends to sharply expand the role and the size of the federal government, and it’s main deficit-improving initiative relies on spending cuts that bear an unfortunate resemblance to unsustainable measures like SGR and the AMT, it’s not obvious that this is a very sound decision.

As House Majority Leader Steny Hoyer has observed, many of the Obama administration’s tax policy goals appear unviable, to put it generously:

It is essential that we move from temporary extensions to permanent solutions, but we cannot consider those solutions without taking into account our long-term fiscal challenges. Permanent solutions for the estate tax, AMT, and the ‘doc fix’ should be developed in the context of the broader budget agreement that I’ll discuss shortly. And 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 their implications for our fiscal outlook, including whether we can afford to permanently extend them before we have a real plan for long-term deficit reduction. At a minimum, the House will not extend the tax cuts benefitting taxpayers of incomes above $250,000, despite some suggestions in the Senate that they be extended along with all other Bush tax cuts. As CBO Director Doug Elmendorf recently warned, extending all of the Bush tax cuts without making any other changes in policy would put us on a path toward a publicly-held debt equal to 90% of GDP by the end of the decade, ‘territory that is unfamiliar to us and to most developed countries in recent years.’ [Emphasis added.]

Hoyer, in a brave and very sober speech, seems to think that the middle class tax cuts of the Bush era are very much on the table. One has to assume, for political reasons if nothing else, that the White House would sacrifice dividend and capital gains tax cuts before it acquiesced to allowing middle class tax cuts to expire. In that case, though, it’s fair to ask if the White House is truly serious, by Hoyer’s lights, about addressing long-term fiscal imbalances.