Geithner predicts Republicans will yield on taxes

WASHINGTON Sun Dec 2, 2012 3:25pm EST

1 of 2. U.S. Treasury Secretary Tim Geithner gestures as he is interviewed by Bob Schieffer (not pictured) in Washington, on November 30, 2012 for the December 2, 2012 edition of ''Face the Nation'' in this CBS handout.

Credit: Reuters/Chris Usher/CBS News/Handout

WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner pushed Republicans on Sunday to offer specific ideas to cut the deficit, and predicted that they would agree to raise tax rates on the rich to obtain a year-end deal and avoid possible economic doom.

But the top U.S. Republican, Speaker of the U.S. House of Representatives John Boehner, stood firm and renewed his stand against increased tax rates, leaving talks at a stalemate.

"Here's the problem," Boehner told "Fox News Sunday" as both sides took their battle to TV talks shows. "When you go and increase rates, you make it more difficult for our economy to grow," he said.

Besides, Boehner said, if Republicans agreed to give President Barack Obama $1.6 trillion in new tax revenue, "He's going to spend it," not reduce the deficit.

Geithner, Obama's top negotiator, said in a separate appearance on Fox that Republicans must step up.

The treasury secretary said Republicans will be responsible if no deal is reached by the end of the month, triggering the "fiscal cliff," deep automatic spending cuts and across-the-board tax hikes that could plunge the country into a recession.

"There's not going to be an agreement without rates heading up," Geithner said on CNN's "State of the Union."

With polls showing most Americans favor raising tax rates on the wealthy and cracks starting to appear in what had been a solid wall of Republican opposition to such a move, the Obama administration figures it has the upper hand.

But Boehner made it clear that the fight has only begun and he is interested in cutting a deal, not sounding fiscal alarms. "I don't want any part of going over the cliff. I'm going to do everything I can to avert that," Boehner said.

He again refused to offer specific deficit reduction proposals, other than to repeat that one option would be to end a number of unspecified tax deductions.

"The president has seen a lot of options from us. There are a lot of them on the table and I'm hopeful that the conversation will continue," Boehner said.

Boehner also reaffirmed his party's opposition to Congress giving the president sole authority to increase the U.S. debt limit, a power both Democrats and Republicans value.

"Silliness. Congress is never going to give up this power," Boehner said, explaining it provides lawmakers needed leverage in dealing with the White House.

'FLABBERGASTED'

More talks are expected this week, at least at the staff level. But both sides have said it may be another week or so before negotiations get serious.

A likely scenario is a possible short-term fix that would postpone the deadline for the fiscal cliff for six months to a year. Geithner's opening offer last week included raising tax revenues by $1.6 trillion, at least $50 billion in new economic stimulus spending and effectively giving the president the ability to raise the debt limit.

Republicans promptly rejected the offer as unacceptable, even laughable.

Boehner said he was "flabbergasted" and recalled telling Geithner, "You can't be serious."

Also on Sunday, the top House Democrat, Nancy Pelosi, renewed her threat to force a vote on a Senate-passed plan to extend tax cuts for the middle class if Boehner does not schedule a vote "immediately."

"The clock is ticking and stalemates are a luxury we cannot afford," she said in a written statement.

If Congress does not act, the temporary tax cuts for all taxpayers enacted under former President George W. Bush will expire on December 31. Republicans want to extend those tax cuts for all taxpayers, while President Barack Obama and his fellow Democrats want the tax cut extended only for those with incomes under $250,000.

Republicans, who control the House but are the minority in the Senate, have expressed a willingness to raise revenues by such steps as limiting tax deductions, but most oppose increasing rates.

The combination tax hikes and spending cuts set to take hold early next year would suck about $600 billion out of the economy.

(Additional reporting by Anna Yukhananov; Editing by Jackie Frank)

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Comments (63)
PositivelyUp wrote:
Reagan cut the marginal tax rate on the wealthiest of Americans from 70% to 38%. He promised it would spur an orgy of investment and rocket the economy to new levels of production and prosperity. Instead, his supply side economics did the exact opposite. It produced the deepest recession since the Great Depression.

Output fell 2.2% in 1982 while budget deficits soared. When Reagan took office in 1981, the national debt stood at $995 billion. Twelve years later, by the end of George H.W. Bush’s presidency, it had exploded to $4 trillion. Reagan was a B grade movie actor and a doddering, probably clinically senile president, but he was a sheer genius at rewarding his friends by saddling other people with debts.

Bill Clinton reversed Reagan’s course, raising taxes on the wealthy, and lowering them for the working and middle classes. This produced the longest sustained economic expansion in American history. Importantly, it also produced budgetary surpluses allowing the government to begin paying down the crippling debt begun under Reagan. In 2000, Clinton’s last year, the surplus amounted to $236 billion. The forecast ten year surpluses stood at $5.6 trillion. It was the last black ink America would see for decades, perhaps forever.

George W. Bush immediately reversed Clinton’s policy in order to revive Reagan’s, once again showering an embarrassment of riches on the already most embarrassingly rich, his base as he calls them. He ladled out some $630 billion in tax cuts to the top 1% of income earners. In true Republican fashion, they returned the favor by investing over $200 million to ensure Bush’s re-election. Do the math. A $630 billion return on a $200 million investment: $3,160 for $1. I’ll give you $3,160. All I ask is that you give me $1 back so I can keep the goodness flowing.

Dec 02, 2012 10:37am EST  --  Report as abuse
stambo2001 wrote:
This coming from a democratic 1%er who himself avoided paying taxes until obama elevated him to cabinet.

Remember the Clintons big tax dodge to avoid taxation a few years ago? We do, but the lefties hate THAT inconvenient truth.

Who sat on the Walmart board of directors killing american jobs and competition? Hilary Clinton, sitting Secretary of the United States.

Who has millions upon millions of dollars invested in Canadian oil companies and pipelines while writing and implementing sanctions on Iran? Susan Rice, the sitting American Ambassador to the United Nations.

Who has made millions upon millions of dollars from insider trading while in office? Nancy Pelosi, the sitting Minority Leader of the House of Representatives.

And the lefties accuse the republicans of pulling fast ones on the middle class?!? Shameless hypocrites.

Dec 02, 2012 11:01am EST  --  Report as abuse
derdutchman wrote:
Tax reform is something the Republicans have been promising since Ike and Mamie slept in the White House. It’s always give us what we want now and we’ll get to tax reform first thing the morning after. They always abort and it’s a bitter pill to swallow.

Dec 02, 2012 11:04am EST  --  Report as abuse
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