December 2nd, 2012
09:00 AM ET
1 year ago

Geithner: No deal 'without rates going up'

Washington (CNN) – Treasury Secretary Timothy Geithner drew a line in the sand over taxes in defense of the Obama administration’s controversial proposal to avoid the fiscal cliff.

In an interview with CNN’s Candy Crowley on "State of the Union," Geithner insisted that any compromise on the plan he presented to congressional Republicans on Thursday, which includes $1.6 trillion dollars in tax revenue, cuts to Medicare, and another $50 billion in stimulus spending, must contain an expiration of the Bush tax cuts for income over $250,000.

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“There's not going to be an agreement without rates going up,” Geithner said in the interview, which aired Sunday. “If they are going to force higher rates on virtually all Americans because they're unwilling to let tax rates go up on 2 percent of Americans, then, I mean that's the choice they're going to have to make."

While he maintains the administration will refuse any deal without the tax hikes, Geithner was optimistic about the negotiations, showing room for compromise as well.

“It's a very good plan and we think it's a good basis for these conversations,” he said. “What we did is put forward a very comprehensive, very carefully designed mix of savings and tax rates to help us put us back on a path to stabilizing our debt, fixing our debt and living within our means.”

The fiscal cliff, which begins in January if Congress and the administration fail to come to an agreement over a number of spending issues, includes automatic reductions in defense and non-defense spending, the end of the payroll tax holiday, and the expiration of extended unemployment benefits. Going over the cliff has the potential to set the U.S. back into another recession.

Republican reaction after Thursday's meeting with Geithner sharply conflicted with the secretary’s assessment of the negotiations and the plan itself. A frustrated House Speaker John Boehner said that “we are nowhere.”

“The day after the election, I said the Republican majority would accept new revenue as part of a balanced approach that includes new spending cuts and reforms,” Boehner said. “Now the White House took three weeks to respond with any kind of proposal, and much to my disappointment, it wasn't a serious one.”

Increased revenues were traditionally scorned by Republicans. Boehner put them on the table by offering to close tax loopholes, reform the tax code and lower rates – a significant move for the leader of House Republicans. He says he will not raise any tax rates and the administration proposing them brought the talks to a “stalemate.”

Geithner disagreed with the speaker’s assessment on the negotiations. He said the administration offered $600 billion in cuts to health care and other mandatory programs combined with the cuts still lingering from last year’s debt ceiling deal (which will result in automatic spending cuts without an agreement by the end of the year) make this “a very substantial packet of reforms."

On the $50 billion in proposed stimulus that includes infrastructure spending, the secretary insisted that it is “something we can afford,” calling it a “modest investment in making this country stronger.”

“I think right now, the best thing to do is for them to come to us and say, look, here's what we think makes sense,” Geithner said. “What we can't do is try to figure out what's going to be good for them. They have to come tell us.”

“I think we're far apart still, but I think we're moving closer together,” he said. “This is something we can do. And I think we're going to get there, because there's too much at stake not to get there, not just for the American economy, but for the world economy.”

The secretary acknowledged the difficulty the Republican-controlled House will have passing this deal, opening the door to concessions on the administration’s part.

“They're in a hard place. And they're having a tough time trying to figure out what they can do, what they can get support from their members for. That's understandable,” Geithner said. “This is very difficult for them, and we might need to give them a little more time to figure out where they go next.”

Reflecting on his time at the Treasury (Geithner plans on leaving the administration sometime after a deal on the fiscal cliff is made), the secretary expressed content and optimism over his four years in office.

“I think we're in a much better position than, actually, I thought was realistic, in those darkest days of this financial crisis, when there was a real risk of catastrophic collapse. And I think all Americans should be much more confident today than at any time in the last four or five, six years,” he said. I'm very proud of being part of that, even with all the challenges we have ahead.”

–Follow Adam Levy on Twitter: @adamplevycnn

Watch State of the Union with Candy Crowley Sundays at 9am ET. For the latest from State of the Union click here.


Filed under: 2012 • Fiscal Cliff • Timothy Geithner • TV-State of the Union
soundoff (218 Responses)
  1. USwatcher

    Let me wrap my brain around this...the republicans are demanding the same things that helped them lose the 2012 election...uh huh...I see...crazy...just crazy.

    December 2, 2012 09:59 am at 9:59 am |
  2. john smith

    I'm in favor of higher taxes for the wealthy, anything under 40% is not to harsh for them. In regards to Clinton era taxes and the state of the economy, another wealth- builder during his tenure was the RISE in the stock market and the profits people made during this time. People paid off their house mortgage with stock profits, and spending in general was brisk from stock gains, a cash injection which would about equal the wealth- effect spending from rising home values.

    December 2, 2012 10:00 am at 10:00 am |
  3. Spending Cuts

    Republicans should just pass the bills they see fit and raise the issue about the "party of no" in the Senate that blocks it.

    December 2, 2012 10:04 am at 10:04 am |
  4. Ray E. (Georgia)

    Wunnerful!
    I think the House has already passed a bill that refuses to raise the rates for the top teir. So, that is what I would go with. Hand it to Obama nd say take it or leave it. Then if the people have strong enough convictions they can start the recall proceedures and recall all the Mostly Republician's that refuse to raise taxes for the Rich/Job Creators. The Fiscal cliff isn't the problem. It's Obama Care. You want it, you got it. However start planning for more food stamps or no food stamps. You want to send the country down the drain, in the planning stages by the Libs for at least 75 years, go ahead. One way or another the Liba are going to get a new one ripped. You voted for it. Next.

    December 2, 2012 10:04 am at 10:04 am |
  5. Neutral Observer

    "any compromise on the plan he presented to congressional Republicans on Thursday, which includes $1.6 trillion dollars in tax revenue, cuts to Medicare, and another $50 billion in stimulus spending, must contain an expiration of the Bush tax cuts for income over $250,000."
    Does anyone find it funny that in order to "compromise", Timy Tax Cheat needs to demand things. Compromise will require flexibility and it usually doesn't go well with making demands and ultimats. "Taxes must go up on you" from a man whom himself is a tax cheat.

    December 2, 2012 10:04 am at 10:04 am |
  6. Jared

    I think we should raise taxes on all government employees to 75% until they can figure out how to work together. Yes this includes you whining liberals who have never done anything wrong and have never been a fault for anything. The republican party is a mess we all know that. Maybe it's high time you looked in the mirror, stop making excuses for poor leadership. You party is just as flawed and has very little interest in FIXING the tax code which is the real issue. Raising taxes will not fix a thing but it may make you sleep better at night knowing that we are redistributing wealth. A process that has never been successful throughout history. This isn't gang warfare, take a look at you own party and stop blaming every one else. I say give the liberal everything they want. They are so smart and so good with money give them total control, lets see where we get. I'm over it, sick of B.S. Dem .vs. repub is the problem. 2 Party system is a joke. Wake of people. On a side note I knew Obama was a conservative, he cut pell grants from 18 semesters to 12 semester and didn't tell any of you leaches. lol

    December 2, 2012 10:05 am at 10:05 am |
  7. Bill Lazzaini

    I think to really teach the evil money makers a lesson the IRS should also take away their first born! I just want to play Odrama in a little game of one on one, for money, my economy sux! Even better, I will play him and Geithner in a game of two on two. I will take a third grade girl and we will win 11-2, maybe 11-1, then they can blame each other! California used to be a great state, it makes a horrible commune.

    December 2, 2012 10:06 am at 10:06 am |
  8. Huff

    Why are Democrats so focused on the 2% when our deficits are over $1 trillion per year? Raising their taxes is miniscule in comparison and won't put a dent in it. This focus on the 2% is purely political leverage based on the fact that the majority of Americans don't know what a trillion or a billion really is. They're dilusional in thinking the tax revenue gained from the wealthy is anywheres near the trillion $ per year deficit.

    December 2, 2012 10:06 am at 10:06 am |
  9. Anthony

    The top rate is going up regardless. All of the Bush tax cuts expire at the end of this year. Obama will get a tax increase on the rich if there is no deal. Without a deal, Republicans can't keep the tax cut for the rich anyway. The question is whether Republicans will deny a tax cut for 98% of Americans that Obama wants. If Republicans refuse to pass a tax cut for 98% of Americans unless the top 2% get a tax cut too , they will be lucky to get 47% in the next election.

    December 2, 2012 10:07 am at 10:07 am |
  10. muadeeb

    Polnick, your numbers are way off. The entire budget 2012 for HUD was about 57 billion with about 28 billion for rent and housing assistance. Still a good chunk of change.

    December 2, 2012 10:08 am at 10:08 am |
  11. Grammygreh

    The proposal includes another $50 billion stimulus package including infrastructure spending?!? Really?Another "shovel ready jobs" deal that aren't so shovel ready? It's like this guy just keeps offering up the same old stuff, even though it didn't work in the last recession. And, what's with sending Tax Cheat Geitner up to Captol Hill to negotiate this? Why isn't Obama up there knocking on doors like all the past Presidents have done during critical issue debates?!? This guy never negotiates anything for himself, he's always sending his minions out to do the dirty work for him. Remember Ambassador Rice going out and telling known lies about the Benghazi attack?!? This Administration is a joke and if we survive it over the next 4 years it will only be by the Grace of God because these folks don't have a clue what they are doing! We're being led by an empty suit that has whooed the American people into a political coma by his artful, divisive speeches. Pitting the rich against the poor, the black against the white, the citizen against the illegal immigrant, the union against the non union and the left against the right! Our country has never been so divided, even worse than the Civil War! And, we can thank Obama and his left wing ideologs for it. God save us all!

    December 2, 2012 10:08 am at 10:08 am |
  12. Don Sumner

    What people fail to understand is that higher tax rates don't translate to more revenue for the federal goverment, this can be seen historically in every country. Lower tax rates that people pay are far more significant than than higher rates that people don't pay. As one of the "2%", I will always find a way to re-categorize income so that it is not taxable at the normal rates, and a good CPA is well worth the money.!
    Wealthy people don't have as much earned income as people who have jobs, so the capital gains tax rates are typically what we pay (15-20%). Also keep in mind that when the government says they will tax the wealthy, what they are really saying is we want to raise taxes on everyone, but sell it as a tax on the "rich".
    It is very easy to move sums of money around and they don't necessarily need to be in US dollars!!!

    December 2, 2012 10:08 am at 10:08 am |
  13. TurnItAround

    The Republicans should agree, provided there is a real cut to non discretionary spending equal to 5 times the revenue increase.

    December 2, 2012 10:08 am at 10:08 am |
  14. Chuck

    The whole thing is a show, seen it done so many times before, they will stay up till midnight and then walk out with a deal.

    December 2, 2012 10:10 am at 10:10 am |
  15. t lee

    the clinton econony (gdp) was growing and had better employment rates and jobs were available for young americans who were graduating. Putting people to work creates more tax revenue and more revenue for gov. assistance programs. To raise taxes at this time on the top 2% with this economy, will this alone cure the problem (NO), show the republican house a plan on cuts to reduce our debt and spending and restore the idea that democrats and the GOP will get this done. Just because the white house is held by a democrat, 75% of america still believes were out of control on spending, dems included. Mr Geithner start rolling us OUT OF DEBT!

    December 2, 2012 10:10 am at 10:10 am |
  16. MMB

    Taxes will need to increase to pay off the deficit, but the $250,000 number been used is too simplistic. Someone living in NYC or another metropolitan area on this amount has a higher cost of living and less purchasing power than someone in a more rural area. So this will have an uneven pain and economic burden than it might seem. More thought required.

    December 2, 2012 10:11 am at 10:11 am |
  17. Raybo

    It is so sad to see all of the negativity in these comments. This president has been the most divisive, non-transparent ever. Please name two, yes just two, campaign promises, except for hope and change. The people are fools to vote this guy in after a depressing first term. For him. it has always been us and them. Hey, dude, the "them" are American, too. Hopfully, we all love our country and want to do whatever it takes for it to succeed. But this group in power is not it. Do away with the party and the lobbyists. We are going down hill so fast that the speedometer is now broken. And it is our fault.

    December 2, 2012 10:14 am at 10:14 am |
  18. Puddin

    GWB and his administration got us in this mess and now, recently, he was in the Cayman Islands where he will no doubt be moving his many millions so as not to support his own country with his taxes. Are some people out there so stupid that they think our government can operate on thin air? Recently, I saw Tim Allen (Last Man Standing) on the Jimmy Kimmel show saying he had rather give his money away than to HIS government. Those who feel that way should get out of THIS country and live somewhere else. Just like anything else, such as churches, our government cannot function without funds. Remember, "Government R Us." Think logically about it, for gosh sakes!

    December 2, 2012 10:14 am at 10:14 am |
  19. Jerry Hoefen

    Raising taxs is like trying to reinvent wheel ,this case congress likes to spin wheel . We all know what has to be done starting with social security. The cap on earnings which person pays tax up to certian amount should be removed. This will make social security solvent agun for everyone who pays into it.Federal an state pensions should be converted over to social security to prevent triple entitlements for those who retire an go back to work for goverment especailly higher income goverment workers

    December 2, 2012 10:15 am at 10:15 am |
  20. farmwife1972

    Republicans care nothing for the middle and lower class people. The weeper of the House needs to go. They all follow Grover Norquist because they are afraid of his threats that if they go against the pledge they signed, he will see to it that they are not elected again. How sad that the American people have to pay the price for their stubborness, stupidity, and hatred of our President!!!!!!!!!!!!

    December 2, 2012 10:17 am at 10:17 am |
  21. kdawg

    I have no problem w/ raising taxes on the "rich". However, labeling a family making 250K a year as "rich" is asinine. Even Warren Buffet categorically disagrees with this assessment.

    December 2, 2012 10:17 am at 10:17 am |
  22. jeff

    If I was the republicans.
    I woukd agree 100 percent on the 1.6 trillion in hikes
    and how oboma wants them.
    My counter would be the 3 to 1 cuts.
    That is 4.8 trillion in cuts.
    Oboma said he would take a balanced approach.
    For every $1 in taxes he would do $3 in spending cuts. Take the 1.6 and give oboma details of the 4.8 in spending cuts expected.
    Also do not accept the dept ceiling changes oboma wants. Call his bluff

    December 2, 2012 10:17 am at 10:17 am |
  23. HenryMiller

    "Geithner: No deal 'without rates going up'"

    Then no deal. The greedy sow that is the US government already takes far too much of our money. They're addicted to spending other peoples' money and have to be cut off if the country is to avoid Greece-style economic collapse.

    “If they are going to force higher rates on virtually all Americans because they're unwilling to let tax rates go up on 2 percent of Americans, then, I mean that's the choice they're going to have to make."

    Let's rephrase that, shall we? "If they're going to try to further over-tax the 2% who already finance 40% of government just so they can continue to buy off the 47% who pay no taxes, then that's the choice they're going to have to make."

    The class-warfare vindictiveness of the Obama administration seems to know no bounds. They're right up there with the 1917 Bolsheviks.

    December 2, 2012 10:17 am at 10:17 am |
  24. geggyg

    @Paul Cooper
    This is the framework Pres Obama gave Boehner in the original meeting , Geitner is negotiating on behalf of Pres Obama with both the repubs and dems to obtain an agreement that can hopefully get through congress. This is normal procedure or shouldnt Pres delegate approriate tasks . Pres Obama doesnt go all the international financial meetings , he doesnt attend every UN meeting , he doesnt negotiate every detail of international treaties , he delegates those things to other people in the administration after he given them a framework to negitiate , including sometimes items that are a "line in the sand"

    December 2, 2012 10:18 am at 10:18 am |
  25. vic , nashville ,tn

    Let Obama fail. Deny second term for Obama ,Obama is Socialist past four years GOP agenda , it didn’t work so move on GOP
    Every campaign stop Obama said let wealthy pay more; Obama won that mean his message won

    December 2, 2012 10:19 am at 10:19 am |
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