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.”
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Economist Daniel Altman is proposing something completely different on the tax front - a system that taxes wealth rather than revenue. It's not intended to raise more revenues but rather to reduce inequality which, he says, threatens growth.
He proposes to replace income, capital gains, estate and gift taxes with a progressive wealth tax that "would do much more to reduce [wealth inequality] than any other tax plan being considered in Washington," according to his recent New York Times op-ed.
Altman's plan would exempt the first $500,000 of wealth from taxes, which he says would affect about 80% of households (these individuals would continue to pay payroll taxes for Social Security and Medicare). The next $500,000 of wealth would be taxed at about 1% followed by a 2% tax on assets valued above $1 million. That's enough to replace all the money collected from taxes on income, capital gains, dividends, estates and gifts, says Altman.
I wish I really cared but unfortunately I dont because this mess could have been fixed a long time ago. I seriously think that there are interests beyond our citizens and U.S. Government that have a purpose in bankrupting this country.
Whether DEMOCRAT or REPUBLICAN you all are going to be responsible for THE FISCALL CLIFF! SO QUIT WHINING ITS PHONY
Well played Barry.
Send little Timmy in with a plan you know will be a non-starter and then blame the Republicans.
Grow some stones and do your own dirty instead of sending surrogates in to take the heat.
First, the DEMS say they will cut spending after tax increases. Hear that lie before, they made that promise twice before and never came through. Second, Obama wants the debt limit authority moved from congress to him. Bad idea to put the debt limit in his hands. You people need to also get your news from an outfit that does not filter what they don't want you to hear. Half the story CNN is dangerous.
Thisis no longer about bush libs!! get over bush. No CEO of any company would continue to blame previous CEO's for their short comings. It is the President/CEO job to get people together to come to an agreement. This blame game is so ridiculous. Both Dems and Repbulicans had their hands in the economic crisis. So all you CNN watchers who are easily then to believe it was all Bushes fault. Get a clue. Its about compromise as the solution as with all truth lies in the middle not with one side.
With Timothy Geithner (the village idiot) now involved, we're definitely going over the cliff!!!
Obama is our leader. We will do what he says. More money in govt's hands is better than in charities or with the people.
The Republicans need to get with the program. The American people spoke on November 6th, and the GOP hasn't heard the message yet. An overwhelming majority of people want to see the marginal rates on the top of the income range go back up to where they were in the 1990s (if not higher, in my case). Call it whatever you want, but the giga-rich need to pay more, period. End of conversation. Sure, we need "entitlement" reform, but that's not going to solve our problems alone. Only by increasing tax revenue by making those who can afford it pay more are we going to start making a dent in the problem. Boehner and his buddies seem to think if they just hold their breath the President will eventually give in. He won't. He's said he won't. And the American people will know who is to blame.
It is funny to hear people fight for tax reduction and want to go back to the glorious days of President Bush. The republicans stated their intentions early in President O's first term. Their strategy was to be the most obstructive Congress in the history of this country and they succeeded. I dont know why President even pretends to talk to these clowns as if they are sincerely trying to fix America's problems. If possible, I hope he just ram everything down the GOP's throat because that is the only way things will get done. This country already is improving without any help from the right so dont stop now Mr President.
it seems that history is not studied in the land of republican politics, i have yet to see one "fiscally conservative" person balance a budget, only the other way around, throughout history. I was tought learn from history to keep from making the same mistakes. This should apply to fiscal policies as well. If you ACTUALLY look, Conservative Presidents run up deficits astronomically, then cry murder when the "liberal " is in office as a means to cut programs that do not affect thier constituents. Pick a "fiscally conservative" leader, and actually look at thier spending, it usually mulitplies the debt. and a liberal must regain office to get a handle on it.
Debt ceiling = statutory approval to BORROW,not pay off existing debt – Thad is wrong. Also from 2001 until mid year 2008 the economy was good, unemployment was in the 5% range and the annual deficit was never more than 400 billion. Then we had the housing bubble and credit default swaps which created liquidity problems of monumental proportions. BOTH parties contributed to that problem over the previous 10 to 15 years. The fiscal problems we have now are because spending over the past 4 years increased 40% (from 2.7 trillion to 3.8 trillion). THAT IS MADNESS. I am OK with returning everyone's rates to where they were before Bush cut them but only if government can constrain itself. Until Geitner is serious on reducing spending, he shouldn't get a dollar more.
The only problem the republicans have is that our President is not a WASP. Otherwise, this finacial cr88 would have been overwith before it ever began.
Here’s my take on taxes. With the pledge of “no taxes,” this means large corporations are able to TAKE our would-be tax dollars by raising their prices of goods or services.
Higher taxes mean there is less available money for corporations to “take.” Similarly, lower taxes mean there is more available for them. Obviously then in a climate of lower taxes, large businesses are able to maximize their profits; essentially taking from individuals our would-be tax dollars.
The proof in all this is the fact that we’ve been on a tax-cutting crusade for over 25 years now. What is the result of all these tax cuts for the average American? You would think that we’d see more money in our savings accounts or in our wallets. But is that so? I’d say no. So where are all these tax saving dollars going to? You guessed it… taken by the large corporations. Truth is, with or without taxes, our savings accounts or wallet sizes would probably be about the same. So why don’t we just raise our taxes since cutting them hasn’t helped us like we were told it would? At least there’s a better chance of our tax dollars coming back to our communities rather than the rich taking it and our dollars ending up who knows where.
And by the way, Republicans presidents Herbert Hoover, Dwight Eisenhower, Richard Nixon, Gerald Ford, and Ronald Reagan all raised taxes. It’s all about today’s GOP with the likes of Rush Limbaugh that have polarized our country to the point where the above mentioned Republicans would probably not have even made it to this year’s GOP primary.
"Raising taxes," actually raising tax RATES, is not an evil thing, especially when it merely returns rates to their previous levels AS SPECIFIED IN EXISTING LAW and only on the 2-3% highest incomes.
So James R, yes, I support asking the top 2-3% to pay more taxes, and am proud to do so.
And I also support major spending reductions, but probably not in the areas you want cut.
Most Americans, Democratic and Republican believe tax rates need to go up, at least for a few years, for the super-rich. And, by the way, if you make over $250,000 per year, you are super-rich, whether you realize it or not. Consider, less than 1/10 of 1% of world citizens earn that much. Just as with most subjects, the media is out of touch with Republicans and assumes we agree with the spokespeople who are assigned by the MNEs, super-PACs, foreign governments to spew lies about our position. And liberal spin-doctors are too lazy to do their research. Republicans do want the deficit and the debt to be eliminated and reduced respectively. However, our goal is not to protect the super-rich. We want to make the super-rich, the rich, the middle-class, and the poor responsible to pay their fair share of taxes and reap there fair share of governmental services. This means we want the poor to make an effort where they are capable. We want practical, proven, carefully-crafted laws that prevent abuse of public welfare programs. The middle class must bare their share of the burden, no more and no less. And the rich and super-rich will bring about their own horrible demise if they cannot control their greed, just has happened in past societies.
"Taxing Wealth" SOUNDS great to those who imagine a socialist utopia... California has been doing it for decades and they still haven't learned that it DOESN'T WORK!!!! Why? Because it's a very UNSTABLE TAX BASE!!!! That's part of what is wrong with California, during a boom the tax revenue goes WAY, WAY UP, and the state legislature is suddenly pressured to use all that extra money for "great things" (spend money on social programs), but when the boom goes away, nobody wants to stop the flow of money for fear of losing votes, instead they actually get the population to vote for more taxes "on the wealthy who don't pay their fair share anyway"... it shouldn't be legal to vote to raise somebody else's taxes and not your own... the fact that this state (California) actually governs solely by popular vote when it comes to taxes shows just how messed up this state really is...
is this the approach that won the election? yes. but is Obama's man really wiling to go off the cliff for seven days of operating space. we have learned from the election that Obama says he has a plan and apparently he doesn't. the educated knew this before the election. the uneducated are just beginning their learning curve. Obama needs to realize that he is not running for president. and slogans are not enough. what skin are you willing to put in the game Mr. President. what departments and or specific real cuts in spending will you endorse. and are you willing to allow the cuts in programs and spending to occur at the same time as your tax increases. when that is the debate, that is when Mr Obama finally has a plan that he is willing to places before the american people. Then we will know what kind of president he is going to be.
by the way the Clinton years were not as good as Reagan's or Bush's terms. then i had rising incomes during Clinton's term I had layoffs and underemployment. that worked for the election but will not work now. this is Mr Obama's term not a third Clinton term. stay strong republicans hold out for cuts before increases or we will never have the cuts.
Cut congresses entitlements, pay.
All this talk on the Tax Rates: I'd really like to see Geithner's details on the spending cuts. Obviously, some of the automatic spending cuts associated with the "cliff" are not included with the plan. Which ones? There's very little detail in this article about the proposed spending cuts and which ones of the "automatic" cuts will be kept and which ones will stay the same.
Folks get with the numbers. Obama wants 800 billion over the next 10 years in new taxes on the two percent. At the same time he projects 12 trillion in deficits. If you think 800 billion in tax revenue ( and another 800 billion from other sources – this is geitners proposal) is going to solve the 12 trillion problem you have all failed math and economics
Geithner is so stupid that I can't believe he can even put his clothes on and talk. There is no money saved to divert to anything knucklehead. The war money was borrowed. Duh. There is no rational reason to believe that increasing taxes to the Clinton era would improve the economy. Spending back then was also a trillion dollars less each year and oil was $30/barrel. We have a president bent on trying to increase the price of oil. If you want to raise taxes to what they were back in the Clinton era then go back to the spending of he Clinton era too.
Tim Geitner is the same guy that missed the entire housing bubble. What a farce.
We currently spend more on defense than the next 13 countries combined. Defense spending accounts for about 20 percent of all federal spending — nearly as much as Social Security, or the combined spending for Medicare and Medicaid. The sheer size of the defense budget — $680 billion in the current fiscal year — suggests that it should be part of any serious effort to address America's long-term fiscal challenges. National security threats have evolved over the past 50 years, changing the nature of U.S. commitments around the world. We need a defense budget that matches these new security challenges, not the threats of the last century. We should also recognize that a strong economy is essential for providing the resources to meet future threats, and addressing our long-term structural debts will keep our economy strong. The single greatest threat to our national security is our debt.
small businesses do not hire or fire based on taxes, it is solely based on how many employees they need for their business, you would never find a small businessman that would refuse to hire more if he can see that he will have a higher profit, that would say he will not hire more and miss out on the extra profit just because he will pay more taxes
the 47% that holler gimme are the rich fat cats who don't pay their share now, and still want even more gimmes, to actually raise revenue by closing loopholes will not affect the fat cats as much as the common man because fat cats don't need mortgages, so all the republicans are proposing is to hit the common man even more, it is totally sad how ignorant the republicans think the American people are,based on what I see here they are basing their assumptions on how ignorant those who are not in the 2% but are republicans, and they think everyone else is as ignorant as their own party members