Treasury Secretary Timothy Geithner said Tuesday it was “deeply implausible” that Republicans won’t help resolve the fiscal cliff over the issue of tax hikes on upper-income Americans.
The comments come as leading Republicans and Democrats start to stake out positions in public ahead of Friday’s negotiations in the White House. Both parties say they want to avoid scheduled tax increases and spending cuts, but so far differ on the ways to do so.
Treasury secretary says in an interview with David Wessel at the CEO Council that higher tax rates for some Americans are a central part of the White House’s deficit-reduction proposal.
Geithner went out of his way to praise the stance taken by House Speaker John Boehner and other Republicans, who have said increased revenue would have to be part of any deal. “You have the Republican leadership acknowledging in public they are prepared to increase revenue; that’s an important change,” he added.
However, Geithner stuck to the administration’s stance that Clinton-era tax rates on those families bringing in more than $250,000 in income would have to return. The idea advocated by Boehner for increased revenue by loophole tightening but without marginal tax rates just wouldn’t generate enough revenue, Geithner told attendees at The Wall Street Journal’s CEO Council event.
“There’s a lot of magical thinking about how much you can raise from tax expenditures to do enough to restore fiscal sustainability and not adding to the burden on middle-class Americans,” he remarked.
Geithner denied that Republicans would gain leverage if the fiscal cliff wasn’t avoided, since the debt ceiling is likely to be hit in the early part of 2013.
“My view is the people who were part of it will draw the right lesson, they’ll do that with less drama. It was enormously costly and damaging,” according to Geithner, who said he would be in his post “until around inauguration.”
He also pushed back against the idea of simply delaying the fiscal cliff. “I know the cliff is unattractive, it would cause a lot of damage and it’s not that complicated to solve. But be careful about those who would extend it; it would leave all the uncertainty on the table.”
Maryland Rep. Chris Van Hollen discusses how Congress and President Barack Obama can avoid falling over the fiscal cliff.
Meanwhile, Senate Minority Leader Mitch McConnell repeated his opposition to the Obama administration’s approach.
“The president needs to lead,” McConnell said as the Senate resumed business. “That means offering a concrete plan that takes into account the fact that half the Congress opposes tax hikes. Not because we’re selfish or stubborn, but because we know it’s the wrong thing to do, because we know it will hurt the economy and destroy jobs.”
Via – MarketWatch
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