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. bobcat

    It is going to take the big three to get our house in order – spending cuts, increase in revenue, and entitlement reform. They need to get this $250,000 mess taken care of before the other things can be worked on. Why not let the taxes on those making over $250,000 rise and set a date (let's say May) as the deadline for revising the tax code, which seems like is going to happen anyway. Put a trigger on that date, not like the mindless trigger to take effect on Jan 1. If enough revenue can be raised by revising the tax code to make the "rich" pay more of a percentage (as the Republicans said they would accept), then roll back the tax on those making more than $250. They need to come to some kind of middle ground and NOT draw lines in the sand. Both sides are acting like kids on the playground.

    December 2, 2012 11:17 am at 11:17 am |
  2. well

    Geitner IS the enemy no. 1 of the people. no amount of lies and BS will change that fact.

    December 2, 2012 11:18 am at 11:18 am |
  3. Thad

    Joe Stecco -
    You don't understand what the debt ceiling is. It's Congress approving treasury funds to pay our liabilities on debt THAT HAS ALREADY NEEN INCURRED. IT HAS NOTHING TO DO WITH FUTURE SPENDING.

    December 2, 2012 11:19 am at 11:19 am |
  4. Shelly

    Obama want all Americans to have a shovel job! That's why all his job ideas are construction level.

    December 2, 2012 11:23 am at 11:23 am |
  5. shoremanbrian

    Guys you Lost, trickle down DOES NOT WORK ! IT LED US INTO THE GREAT RECESSON ! LISTEN ! The top 2% will prosper no matter What! If that 'SYSTEM "worked so well HOW come we went into a recession. LOSE JOBS. Where the F WERE THE JOBS AND NOW !? So don't give me that BS about it gonna hurt the Economy ! Tespublican way doesn't work ! Oh and if you look up some of the debates your republican Hero Had " RONALD REAGAN " he made the same Arguments this President is making. Help the 2% vs. 98% – you figure it out! LOSERS!

    December 2, 2012 11:23 am at 11:23 am |
  6. Jim

    Trickle down economics does not work. Just look at economic condition since Bush tax cuts were implemented. Unemployment only increased, so these people with more tax savings are not really hiring more people. In the mean while the richer people got richer and poor people got poorer. What Obama team is proposing is not tax increase, getting back to the tax rate that was before Bush, for top 2% of people.

    December 2, 2012 11:24 am at 11:24 am |
  7. John

    First of all this so called tax cliff will not raise tax, it will return the tax rates to previous period of balance. The Bush tax breaks cause the deficit! That and two wars and increases at the CIA and Homeland security! You can't expand Government and not pay for it.

    December 2, 2012 11:24 am at 11:24 am |
  8. Carlin123

    Geithner also said NOT to break-up the banks. The banks that helped bring down the economy in 2008? You remember the banks that were to big to fail? Those same banks that are even bigger today. So his advise is questionable to say the least.

    December 2, 2012 11:24 am at 11:24 am |
  9. Name OutOfTheBox

    Nobody seems to notice it is not about RAISING TAXES. It is about ELIMINATING bush tax CUTS.... going back to the way things were BEFORE BUSH. and that's a good idea.

    December 2, 2012 11:25 am at 11:25 am |
  10. Honest John

    Raising taxes without cutting spending will not get us anywhere. Cutting spending without raising taxes will do the same. Both parties are being obstructionist and neither have the best interest of the nation at heart.

    December 2, 2012 11:26 am at 11:26 am |
  11. RSVP

    @Anonymous – There is no doubt that Norquist will have a Wikipedia page but it won't be long. He will be a footnote under karma.

    December 2, 2012 11:27 am at 11:27 am |
  12. Tommy

    Raising taxes on the rich, the $800 billion or so, pays for Government spending for about a week. Major spending cuts need to take place across the board to resolve this deficit nightmare. Tax revenue... yes. But if you tax the wealthy too much, they will reduce their hiring, which will increase the unemployment numbers. I like the the president but he needs to spend his time hammering out a deal not trying to sell a new proposal (one that calls for double the tax revenue he campaigned for) to the American people. The republicans will likely put $1 trillion or so on the table in tax revenues (it really doesn't matter how... loopholes or taxes), but the president must be willing to offer a very serious deal on massive spending reductions. Otherwise, even with tax increases, he leads us into trillions more in debt, higher unemployment, and a rash of other very serious problems that come with it.

    December 2, 2012 11:28 am at 11:28 am |
  13. Hillcrester

    Obama holds the winning cards: no rate increase for the top bracket = no deal = sequestration cuts and rate increases at all levels = intense pressure on GOPhers in the House to rescind lower bracket rate hikes and some of the defense cuts.

    Well played, Mr. President! This time a "do nothing Congress" actually reduces he deficit. The bill to raise the top bracket rate already passed the Senate and can be passed by the House whenever the agony becomes too much for House members, all facing re-election in 2014, to bear.

    December 2, 2012 11:29 am at 11:29 am |
  14. Poor independant

    I'm a middle class father of three, paying 20% tax rate. Its time the millionares pay their 20% of the pie no if and or buts. If not rote them out of office.

    December 2, 2012 11:31 am at 11:31 am |
  15. Liberal Atheist

    Austerity does not work, that has been proven time and again by every country trying to implement austerity measures (Britain, Brazil, Ireland, Greece et al). This is a problem created by Bush 2. His initial tax cuts would not have been such a bad thing, but when you throw in 2 un-funded wars and a de-regulation of the financial industry (because we can trust them to police themselves–yeah, right), you get the housing bubble and market collapse of 2008. The bailout kept this from being a depression, but conservatives don't want to admit it. Bottom line is the government needs to pump money into the system when it is in a down time (see FDR and the Great Depression programs) and you cut spending when there is a surplus. Cutting taxes and cutting spending is downright idiotic because the math does not add up, no matter how hard conservatives argue.

    December 2, 2012 11:32 am at 11:32 am |
  16. Mike Orrico

    As a small business owner, I am vehemently opposed to increasing taxes on income over $250K. Who has funded most of the job growth in America since 2008 - small business owners many of us who have incomes over $250K. That tax money is better spent on jobs and funding small business growth than giving it to the Feds who will spend it recklessly has they have shown us time and time again. The threshold needs to be over $1 million and then you might get the GOP and the 48% of Americans who are opposed to Obama's tax policy over the line. If not, then I am OK with no deal.

    December 2, 2012 11:32 am at 11:32 am |
  17. NorCalMojo

    This is getting stupid. All we're hearing is what they're not willing to do.

    What else is on the table? The tax cuts for the rich isn't going to bridge the spending gap by itself. What spending cuts are the democrats willing to give in return for eliminating the tax cut on high earners?

    December 2, 2012 11:36 am at 11:36 am |
  18. a disgrace but you voted for him

    since obama's terrible spending is mainly responsible for the fiscal cliff and a failing america being bankrupt the smartest thing to do is throw obama off the cliff as a test to see how bad the fall is going to be.that way nothing valuable is lost...

    December 2, 2012 11:37 am at 11:37 am |
  19. sammyboy

    If you really want a balanced approach Mr President, then shouldn't the spending cuts be equal to the revenue increase? Right now it's $500 B in spending reduction and $1.6 T in new revenue. How about real spending reform before you ask overtaxed people to pay more. You know the dems are going to only give spending cuts that don't kick in for years. It's the same old story, keep spending and let someone else pay for it. a recipie for disaster

    December 2, 2012 11:37 am at 11:37 am |
  20. Honest John

    3 ways to raise taxes on rich without hurting the little guy, and without being oppressive to the rich.
    1. Social Security taxes are on entire income, not just first $100k or so.
    2. First $250k of capital gains in a year is taxed at 15%. Anything past that is 30%.
    3. Each stock or bond transaction incurs a tax of $1 per $5,000 of transaction. A small stock purchase costing $1,000 would cost a person $0.20. A mega purchase of $1,000,000 would cost $200. This should raise about $5billion a year from stock transactions alone, and would have the added benefit of penalizing day traders more then people who invest for retirement and don't make many transactions.

    December 2, 2012 11:38 am at 11:38 am |
  21. rightospeak

    As I have written before-it is all a circus, while our country is going downhill fast. They seem to have money for endless wars and foreign aid, money for Wall Street welfare, but somehow they lack money for people- no matter who is in office. The elderly were robbed in phoney COLA (Boskin Commission -Clinton) that ignores fuel costs in calculating inflation , so that SS recipients are always losing.People have lost on their 401 Ks due to engineered bubbles, many have lost homes and jobs which were offshored. Many have no healthcare. Now, they are going to cut the social safety nets. Are we being set up to be sold to the Communist Chinese ?

    December 2, 2012 11:39 am at 11:39 am |
  22. James R

    Why in God's name would anyone want more money in the govt's hands? Whether it is coming from rich or middle class? Tax cuts for ALL and get rid of some of the insane spending not just Medicare. It amazes me the power Obama has over the masses.

    December 2, 2012 11:39 am at 11:39 am |
  23. Namenick

    All dens want to do us raise rate to Clinton or possibly above. They indicate cut in spending down the road. This plan as they have it would raise taxes hurt the economy and increase the deficit. The idea is to pay down the debt and not use taxes for additional spending. You need a good economy for this to work also.

    December 2, 2012 11:39 am at 11:39 am |
  24. Steve

    Game of poker. That's unfortunate. All took the job they had to further the best interests of this country. Slightly different opinions as to what the best interests are but this is stupid.
    Loyalty to ideology (No tax increases agreement) seems to have trumped the best interests of the citizens.
    In Egypt, they are in the streets fighting for their freedom. Here, we sigh and say "that's politics."

    December 2, 2012 11:42 am at 11:42 am |
  25. James R

    Getting rid of tax cuts most certainly IS raising taxes. Are you or are you not asking people to pay more taxes?

    December 2, 2012 11:42 am at 11:42 am |
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