December 2nd, 2012
09:00 AM ET
2 years 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. karhy melancon

    How can you take more away from disableand elderly people with there health care,what are they going to do?are they just surpost to just die because they can not pay for medical care. These poeple who have worked all there life should have what they need. Why don,t congress cut there pay not the poor who don,t have it too give. You keep takeing form people who need it and there will be thousands homeless and dying because they cant live on what they are making. WAKE UP AND FIND A WAY TO HELP ALL AMERICANS

    December 2, 2012 10:20 am at 10:20 am |
  2. JD

    So. Bill Clinton broke the back of the middle class to get where he was? Those were his tax rates. Everyone loved bill so much, let's all go back to his tax rates. All of us. I don't believe in discrimination by government on any level.

    December 2, 2012 10:21 am at 10:21 am |
  3. Chris West

    There are too many poor people in America. If we had a war, I mean really big war, we could get rid of a lot of them. Plus a war would help with the economy.

    December 2, 2012 10:21 am at 10:21 am |
  4. Really?

    This is NOT a football game. But to watch the partisanship you might think otherwise (I'm talking about us.. NOT the politicians). It's not about republicans or democrats... It's about the literal survival of America. The MOST important thing here is that we are spending too much! Anyone saying otherwise is a fool. You don't get 16 trillion in debt by spending too little. For those thinking we can just increase our debt perpetually (another fool) when we hit around 20 T we effectively can only pay the interest. Game over.

    December 2, 2012 10:22 am at 10:22 am |
  5. Jimh77

    So Don Sumner, you will weasel your way out of helping the American economy get better. If you are in the 1% you my friend are part of the problem with this economy. When you shift your money off American soil to hide it is just wrong ethically. You are a weasel.

    December 2, 2012 10:22 am at 10:22 am |
  6. octavius

    The spending cuts refered to by ghetner from prior talks. Were not nat spending cuts at all. They cut 1 tril in discretionary spending and added the 1 tril they cut to mandatory spending. The democrats are always full of smoke and mirrors. Dealing with them is like trying to deal with a spoiled brat with anger management issues. A " comprimise" isnt one sided concessions. What is holding up the deal is that there have been NO concessions made by the dems. They keep " drawing lines in the sand" when we need them to cut spending. These cuts are just as important as the tax hikes on the top 2%. I think we can largely agree that gov spending is out of control. So why jus raise taxes? Thats the lazy way out. I believe that with some soul searching there are alot of things that could be cut and privatized to reduce our gov spending. When was the last time the usps made a profit? Do airort screeners really deserve 40 usd an hour. The nation endowment for the arts, is it really necessary to fund artists who have no talent? Just a few things right there. If we let them just keep raising taxes, you do realize the middle xlass is next, right?

    December 2, 2012 10:22 am at 10:22 am |
  7. anonymous2

    Stop the war! Press sect. said over 12 times, "We must protect the middle class". From Who? They are citizens too! Why does this administration keep trying to create class warfare. Election is over and you won! Stop the sound bites and gives us facts. raise taxes just a little bit, doesn't tell us much. Seems this admin. talks more to union leaders than it does Republicans like they did with the talks in the White house on health care "Cadillac plans" Now they have a plan on the table finally, but sure enough, let's slap them in the face with $50B more spending for inter-structure, which translates into "Union"
    We are trying to cut spending, not increase it!!
    As for the large majority vote Mr Obama keeps talking about. 50% don't vote and the got 52% of voters. This come out to approx. 27% of American people. How hard is that when a large majority are in the 47% that don't pay ANY taxes. People that don't pay any tax will ALWAYS say soak the rich. OK, Let's raise the tax on the top 2% who are paying most of the taxes already. It's going to happen BUT let's compromise like you said you would and CUT SPENDING we cannot afford.
    Another sound bite to axe..."fair share". To the 47% that don't pay anything??, fair share will be 95%.

    December 2, 2012 10:23 am at 10:23 am |
  8. Bill

    The total revenue raised by eliminating the tax cuts on the wealthy (questionably over $250,000/year) would add $86 Billion per year to federal revenues, or enough to run the government for about 8.6 days. This is just a distraction (and still campaigning) rather than addressing the true problem.

    December 2, 2012 10:26 am at 10:26 am |
  9. Name

    The real problem is that our government has no real interest in even approaching the national debt.

    December 2, 2012 10:26 am at 10:26 am |
  10. Mike

    Whatever. Stop spending so much so the tax increases are not wasted.

    More more more for what? More of the same?

    I need to balance my checkbook and cut back sometimes. So does the American govt.

    December 2, 2012 10:26 am at 10:26 am |
  11. Ed

    Let taxes go up for everyone. We are broke! Evryone, even the poor need to pay their fair share. Let's overtax businesses, they make too much money.
    Let's get rid of the earned income credit, no sense in keeping couples that get divorced and still live together,get tax dollars in return.get rid of the child care credit. Can't afford to pay, don't have kids. Very simple. Everyone including the rich should pay much more. Ho,ho,ho,ho.
    Welcome to poor America.

    December 2, 2012 10:28 am at 10:28 am |
  12. Ralph in Orange Park, FL

    Keep arguing while we go over the cliff.

    December 2, 2012 10:28 am at 10:28 am |
  13. sergio

    It is clear that Boehner, and the majority of republican members of congress and the senate, as well as republican governors and their state legislators, have become the party of the plutocracy, the party of the rich, as they are willing to sacrifice the middle class tax cuts, and standard of living of Americans, in order to protect the billionaires from higher taxes. The Republican Party will be happy to burn the nation; in order to protect the rich…If we go over the cliff is because the Republicans will be doing the PUSHING!!!

    December 2, 2012 10:28 am at 10:28 am |
  14. Clarke

    GOP says they are nowhere with this. Well you are nowhere because that is where you want to be. IMHO! You want the Bush tax cuts to expire, so you can blame Obama for not keeping his promise. Well I say , let the People take the vote on the two proposals and we will decide . Maybe we don't need all you lawmakers after all, that should save us some money.

    December 2, 2012 10:29 am at 10:29 am |
  15. shawn

    Heres a thought politicians, you say you care about the country and her citizens? Dont want to raise taxes on the 1 percent, those who lobby and shower you all with gifts, and by gifts i mean green backs, well how about you all take a pay cut to about 28k a year( the average middle class take home pay) and loose your free health, dental, vision etc. Take a note from new jersey gov. Who chose to live off of food stamps alone for a week. Wake up people! " average " america is pissed and if you all ( gop) cant get your ducks in a row then step down and let compitent people step up and do the negotiations. Voters, seek to elect those who have lived as a middle class americans. Stop electing wealthy turds who only care about their wallets and have created a business out of politics.

    December 2, 2012 10:29 am at 10:29 am |
  16. PragMatist

    Folks, wake up! We are being played! The Democrats don't want a deal. Neither do the Republicans. Both sides need an enemy to run against in order to win public support for their side. Both need to make the other side look like the bad guy. They know that their loyal supporters will believe them against the other side no matter what argument is offered. They just want to get us stirred up so we'll scream and hollar at the other side and give our loyal support to the side we believe in. Folk, don't drink this koolaid!

    December 2, 2012 10:29 am at 10:29 am |
  17. Tom

    I hated Clinton. BUT, I would take him over Uncle Barry ANYDAY!!!!! Let us go over the cliff. Have at it. I keep reading that it is the Republicans that don't want to pass a tax cut for 98%. Are you kidding me? You have enjoyed the present tax CUTS for 11 years. There is NO tax cut for the middle class. It is ALREADY there. The scare tactics are pitiful. Calling the Republicans SCROOGES when you have enjoyed your low taxes for the last 10 – 11 years just proves how HYPOCRITICAL your party is. Just painful to read this CRAPPOLA!!!!

    December 2, 2012 10:29 am at 10:29 am |
  18. WTH

    Having someone like Geithner over seeing the Treasury Department makes me sick. He's a crook and cheated on his own federal tax returns. Hit the road buster – get lost.

    December 2, 2012 10:29 am at 10:29 am |
  19. Hawk in Texas

    I see by the postings that there are still a lot of right wingers that haven't figured out why the republicans lost the election. if bohner keeps it up what he is doing now. there will be a lot less republicans in 2014.

    December 2, 2012 10:30 am at 10:30 am |
  20. Emily

    Why is $250,000 the lower limit for the tax cuts? We have a big debt problem to deal with, so why aren't ALL taxpayers with six-figure incomes being asked to pay more?

    December 2, 2012 10:30 am at 10:30 am |
  21. Harin

    Republicans are in no position to dictate cuts. They know it and so do the Democrats. Only the Democrats can put on the table any cuts that can actually get passed. So far they have taken back most of the detailed cuts from past negotiations and replaced them with promises to negotiate new ones next year. The taxes are going up, but at this time it appears the Republicans are digging in their heels till they see real cuts from the Democrats that can be voted on with the tax increases.

    December 2, 2012 10:30 am at 10:30 am |
  22. Anonymous

    "This president has been the most divisive, non-transparent ever. Please name two, yes just two, campaign promises, except for hope and change."

    Uh oh. An anti-Obama troll having a sour grapes trantrum.

    December 2, 2012 10:30 am at 10:30 am |
  23. nathan

    Chuck you hit the nail on the head, all its all a show and we know deep down they will work out something, it happened with the debt ceiling and it will be the same, i have no political affiliation to one side or the other.

    I agree taxes do need to go up on the rich, but i dont think its gonna be the way obama wants. The republicans need to make this deal happen too otherwise they will be voted out of office when their elections come up

    December 2, 2012 10:31 am at 10:31 am |
  24. Bob

    I was always taught to stand with what's right. No matter what the majorities position is. Quite simply I happen to be in a position where my income is up rhere. Rightfully I already pay a lot more taxes simply because I make more.

    Example 20% of 50000 = is 10,000, 20% of 250000 = 50000.00. I am great with paying my share. I say close the loopholes (which I never seem to be able to find. The news and goverment do a great job at keeping the people divided. I say keep the playing field level. A Flat percentage,what ever that number may tuen out to be for all citizens is the only fair way To Go. Give me an incentive to make more, work more and I may just choose to do that. Focus our attention on taking care of our neighbors, our country. PEACE HAPPY HOLIDAYS.

    December 2, 2012 10:34 am at 10:34 am |
  25. JP

    I'm not for ANY tax hikes, without spending controls; But if the smartest economists we have (admittingly smarter than I), say no matter what we MUST raise taxes... then I have to say, raise it on 2% rather than 100% of the populace.

    I'm a Republican, and I don't like the "they can afford it, tax them" theory about taxing the rich; But the reality is, ifs tax increase is imminent, it only makes sense for the greater good to save 98% of the populace from it.

    December 2, 2012 10:35 am at 10:35 am |
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