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U.S.'s Geithner predicts Republicans will allow higher tax rates
December 2, 2012 / 2:07 PM / 5 years ago

U.S.'s Geithner predicts Republicans will allow higher tax rates

WASHINGTON (Reuters) - U.S. President Barack Obama’s top fiscal negotiator pressed Republicans on Sunday to offer specifics on deficit reduction, and predicted they would agree to raise tax rates on the rich to secure a year-end deal to avoid possible economic doom.

U.S. Treasury Secretary Timothy Geithner (C) and Obama's top legislative aide, Ron Nabors (center R) walk through a U.S. Capitol hallway after a meeting with House Minority Leader Nancy Pelosi (D-CA) on Capitol Hill in Washington D.C. November 29, 2012. REUTERS/Benjamin Myers

U.S. Treasury Secretary Timothy Geithner said “I can’t promise” that the United States won’t go over a looming “fiscal cliff,” triggering automatic tax hikes for most Americans and deep spending cuts in early 2013. He insisted it is up to Republicans.

“That’s a decision that lies in the hands of the Republicans that are now opposing an increase in tax rates” for the wealthiest Americans, a key sticking point in negotiations for a broad deficit-reduction deal, Geithner told “Fox News Sunday.”

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

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.

“Here’s the problem,” Boehner said in a separate appearance on Fox. “When you go and increase rates, you make it more difficult for our economy to grow.”

Besides, Boehner said, if Republicans agreed to give Obama a proposed $1.6 trillion in new tax revenue, “He’s going to spend it,” not reduce the deficit.

With the public and financial markets worried about the fiscal cliff, Boehner used the TV appearance to try to soothe concerns, not increase them.

“I don’t want any part of going over the cliff. I‘m going to do everything I can to avert that,” Boehner said. But he said the two sides remained far apart with the deadline less than a month away, adding “We’re nowhere.”

He again refused to offer specific deficit reduction proposals, other than to repeat that one option would be to close 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.

In a blitz of television appearances on five Sunday talk shows, Geithner insisted that tax rates on the richest must go up, and dismissed much of the contentious rhetoric from last week as “political theater.”

“The only thing standing in the way of (a deal) would be a refusal by Republicans to accept that rates are going to have to go up on the wealthiest Americans. And I don’t really see them doing that,” Geithner told NBC’s “Meet the Press.”

The comments mark the latest round of high-stakes gamesmanship focusing on whether to extend the temporary tax cuts that originated under former President George W. Bush beyond their December 31 expiration date for all taxpayers, as Republicans want, or just for those with incomes under $250,000, as President Barack Obama and his fellow Democrats want.

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 they have largely held the line on increasing rates.

A handful of House Republicans have voiced flexibility beyond that of their party leaders about considering an increase in tax rates for the wealthiest, as long as that action is accompanied by significant spending cuts.

But most House Republicans refuse to back higher rates, preferring to raise revenue through tax reform.

“There’s not going to be an agreement without rates heading up,” Geithner said bluntly on CNN’s “State of the Union.”

The scheduled expiration of the Bush-era tax cuts and automatic reductions in government spending set to take hold early next year would suck about $600 billion out of the economy and could spark a recession. The Obama administration and Congress are engaged in talks to avoid the fiscal cliff with a less-drastic plan to reduce U.S. budget deficits.

Reporting by Aruna Viswanatha and Thomas Ferraro; Editing by Jackie Frank

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