December 2nd, 2012
09:00 AM ET
9 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. joke

    What good on raising taxes on the rich? All it will do is hurt the middle and lower class who's livelyhoods are depedent on the rich spending they're money. The rich' lifestyle will not change, they will just change how and in what why they spend and invest they're capitol. This is economics 101 and finance 101 and Geitner is arguing it with it, what does that tell you? that tells you this is all about a socialist – anticapitalist agenda regardless of the consequences. You middle and lower class citizens who are happy about this - don't be happy.

    December 2, 2012 10:35 am at 10:35 am |
  2. Guy Baez

    Obamas plan is more spending, more entitlements and more taxes. The middle class will pay the bill because half of America does not pay taxes (Team Obama). Of the other 50%, 2% are "rich" and you could tax them 99% and not pay off the budget deficit. The remaining 48% are the broken middle class that Obama hates so much but will bear the burden of the entire debt.

    December 2, 2012 10:36 am at 10:36 am |
  3. jpmichigan

    According to Fact Check and the Tax Policy Center This so called "fiscal cliff" would cost middle income who earn $40-64,000/yr $961 tax dollars and those earning $0-75,000/yr. @1,100 tax dollars to pay, if there is no compromise.The problem is Obama wants to spe;nd money not cut the deficit, so for him its a win/win situation, no compromise he will take credit , and blame the republicans, but he still spends money and the deficit rises. Democrats cry foul when it comes to changes in medicare and social security, and yet they cut payment to Social Security by cuting SS payoll tax. Then the government had to barrow to pay social security receiptants, The government never as of yet, paid back money to SS they barrowed from it in the past. CBO states significant tax increases and spending cut will occur if a compromise is not made by Dec. 31st, which will cause a fall baack into recession, BUT eventuallly will make the economy stronger in the next decade. Keeping the same policies in place would least to faster economic growth , BUT a weaker economy in later years. So Obama wants to spend, spend and spend some more and let the future fend for its self. HERE WE COME< GREECE!

    December 2, 2012 10:37 am at 10:37 am |
  4. bill davis

    We could all just CHEAT like TIMMY did and not worry about it...

    December 2, 2012 10:37 am at 10:37 am |
  5. NJDoug

    As a conservative, I think the republicans need to compromise and let the taxes on the top 2% go up. I also think the Republicans have a valid point in stone walling this over the additional spending proposed by the Democrats. How about Republicans give in on the taxes, and the Democrats cut the additional spending? Already sick of watching a bunch of politicians who have excellent pay and some of the best benefit packages in the country do NOTHING and still get compensated.

    December 2, 2012 10:38 am at 10:38 am |
  6. jpmichigan

    Should hae read $50-75,000 increase tax of $1,100.

    December 2, 2012 10:39 am at 10:39 am |
  7. joe Palmer

    The GOP is in the pocket of corporations, the wealthy and fascist interest who want to destroy the middle class in America. Everything else is beside the point.
    The GOP must be destroyed and then rebuilt as a more centrist party that represents the best of middle class ideals; not the fascist dream of a wealthy elite, served by and unedcuated underclass of serfs and vassels

    December 2, 2012 10:39 am at 10:39 am |
  8. Anonymous

    Congratulations Senator for doing the right thing for the counrty. And trust me, there will be no place in the history books for that pathectic litlle man, Norquist. Not even a very small foot note.

    December 2, 2012 10:41 am at 10:41 am |
  9. GonzoinHouston

    The only way the deficit will be significantly reduced is through major economic growth. Obama's plan is a decent first step only. For 30 years our government has systematically redistributed the wealth of the nation from the middle class and poor to the rich, and from the young to the old. We have gone too far in this. While socialism doesn't work, neither does plutocracy, and right now we are much closer to the latter. Our economy is consumer based, and our prime consumers are the middle class. If we rebuild the middle class we will rebuild the economy.

    Go ask any business person which he would rather have more of; investors or customers. Middle class consumers are the customers of our economy.

    December 2, 2012 10:41 am at 10:41 am |
  10. Blackcurry

    If the Republican'ts really want to cut spending, I suggest they start with their exorbitant salaries, pension plans and perks. (This applies to all members of Congress). Then they can move on to foreign aid, eliminating funds to all nations not supporting the United States. Next, they can cut funding for inane "scientific" experiments to study the sex life of tse tse flies, etc. Next, move on to subsidizing corporate farms to NOT produce crops. Stop all benefits to illegal aliens. We can no longer afford to play big daddy to the world. We should be helping our own people. Change the name of Medicaid to Humanitarian Aid to Americans. Our military forces already have enough firepower to obliterate the entire world. Cut military funds to produce new and more horrible ways to kill. We should be protecting our elderly and our children. Maybe one day.........not in my lifetime..........we will produce a generation of people who can figure out why our society is so screwed up and fix it.

    December 2, 2012 10:43 am at 10:43 am |
  11. TexasVoter

    The Republican leadership will continue to lie and say the Dem's are doing nothing, due to fact they know thats what the Republican News Channel (Fox) will broadcast. Fox does not believe in freedom of the press and like communist run TV will only post along party lines, knowing most conservative only read Fox. The Republican leadership also thinks seniors should put a gun to head and save the government money

    December 2, 2012 10:43 am at 10:43 am |
  12. cbfop

    Social Security and Medicare are enployee and employer paid programs .The government should stay out of them.Cut all aid to illegal Aliens,put welfare people to work in the jobs illegal aliens are taking from American workers,cut all of obama 's socialized medicine programs.

    December 2, 2012 10:43 am at 10:43 am |
  13. Mac

    Do the Republicans really want to got to the people and say 'our principle of defending the richest 2% of Americans is like a sacred pledge" that going to fly in the next election campaign?

    December 2, 2012 10:43 am at 10:43 am |
  14. Anonymous

    Geithner sure uses the word I a lot. I person who begins every sentence with the word I is basically saying he really doesn't care what others think. Sounds like he is more concerned with his ego rather than America. This guy scares me, especially with the deals he made in the back room with large banks and Europe. I recall this guy cheated once cheated on his taxes, like Dodd cheated on his mortgage. Do you see a pattern here? Someone has taken the weak that can be manipulated and I say the ones controlling the strings are the banks. The banks created the financial crisis to do away with the mortgage bankers and brokers. Look around, they got rid of the competition by making rules that apply to everyone but themselves, with this rules making it impossible to stay in business. They are doing it now in the medical industry. One day, America will take their noises out of their Iphones. Androids, iPads and internet (See the word I) and the truth will come out. You can not have a recovery with all this red tape and political manipulation of the American people.

    December 2, 2012 10:43 am at 10:43 am |
  15. Jeffrey Jankins

    Liberals say that an unborn baby is not a person because it cannot live on its own and is dependent on the mother, and therefore it is okay to kill it. Well, what about welfare recipients? They are unable to live on their own and are dependent on public assistance. By liberal logic, shouldn't we be able to abort welfare recipients?

    December 2, 2012 10:43 am at 10:43 am |
  16. Nelson Igwe

    Republicans like his policies but they dont like the man. Change the man and they will accept the same policies from another.

    December 2, 2012 10:44 am at 10:44 am |
  17. Howard Feinski

    You ever see those action movies where many bags stuffed with $100 bills are snatched? Well, it really happens, but in the hallowed halls of D.C. now.

    December 2, 2012 10:44 am at 10:44 am |
  18. Bill

    Everyone talks about going back to the Clinton tax rates. I'm fine with that as long as we go back to the Clinton spending rates as well.

    Government is not nearly twice as good as 13 years ago. Yet we are spending more than twice as much. ($1.785 trillion in FY 1999 vs $3.792 trillion in FY 2012).

    December 2, 2012 10:44 am at 10:44 am |
  19. PaulGadner

    If you right wingers are so fixated on cutting spending, then why don't you just embrace going over the fiscal cliff? This will make automatic cuts of over $500B the first year. There...your dreams come true!

    The problem with this approach, of course, is that this drastic measure will sink the economy. This is why the President, wisely, wants to take a measured approach, which cuts $4T over 10 years, rather than trimming everything at once.

    December 2, 2012 10:46 am at 10:46 am |
  20. Lost the Faith

    The democrats have raised the tax revenue request from 1 Trillion to 1.6 trillion. In addition they have thrown in a request to raise the debt ceiling and to get 50 Billion in stimulus spending. No matter who you favor and what you views are, I think we can all agree that slapping your associates in the face is a bad way to begin negotiations.

    December 2, 2012 10:50 am at 10:50 am |
  21. gaggedinusa

    that's not what he said. he said no deal without taxes going up on the wealthy. he didn't think they would go up on the poor. watch face the nation.

    December 2, 2012 10:51 am at 10:51 am |
  22. tony

    The whole obscenely expensive defense industry that already can kill very human on the planet 50 times over, is there to protect the biased trading advantage of wealthy corporations and individuals overseas, and their valuable extensive low taxed properties, far more than to stop an almost impossible invasion of US lands. But they want the 99% to pay all of it, while they import nannies for their children at near slavery $1.00 an hour.

    December 2, 2012 10:52 am at 10:52 am |
  23. Jimh77

    What America really needs is all of the folks in Washington making over 250K per year sent home. When did politics become a cash cow? We need term limits, no more than 45K per year in salary and no free health,dental, retirement or any other perks. You work for the American people and you pass the laws the majority of the people want and negotiate those laws to make them fair for all. Remove all lobbyists from Washington and make it a federal offense to Lobby with huge money gifts. Wall Street is not to be making policy, Pharma is not to be making policy. Corporations are not to be making policy.
    All current politicians are all crooks and stealing fro America.

    December 2, 2012 10:54 am at 10:54 am |
  24. ST

    I haven't heard the wealthy complaining with the wasted millions they contributed to unsuccessful election, and still they are doing fine. How come now that they will feel a pinch when they pay a little more in taxes?

    December 2, 2012 10:54 am at 10:54 am |
  25. NoKidding

    @Jeffrey Jankins: you probably don't realize that quite a few republicans are welfare and food stamps recipients. In fact, quite a few of the "red states" are heavily dependent on welfare and food stamps. Welfare and food stamps are not just for "liberals".

    December 2, 2012 10:55 am at 10:55 am |
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