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Geithner cautiously optimistic about cliff

Dec. 2, 2012 at 3:05 PM   |   Comments

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WASHINGTON, Dec. 2 (UPI) -- U.S. Treasury Secretary Tim Geithner Sunday predicted a deal will be reached with Republican leaders on avoiding the so-called fiscal cliff.

Geithner made the rounds of the Sunday television talk shows and sounded fairly upbeat about the prospects for an agreement on taxes and spending that would allow the United States to avoid Draconian tax hikes and budget cuts.

"I do think we are going to get there," Geithner said on CBS' "Face the Nation.

Geithner predicted Republicans would have to soften their tough stance on extending tax breaks for the wealthiest taxpayers because the consequences of going over the cliff included higher taxes for middle-class workers and a likely ripple effect of an overall economic slowdown coupled with cuts to social services.

"I mean, inevitably there is going to a little bit of political theater in this context," Geithner told ABC's "This Week." "Sometimes that's a sign of progress. I think we're actually making a little bit of progress, but we're still some distance apart."

Democrats have portrayed congressional Republicans as going to the mat to protect tax breaks for the wealthiest 2 percent of Americans, enacted during the administration of former by President George W. Bush and set to expire at the end of the year. President Barack Obama campaigned for re-election on extending tax breaks on all income up to $250,000 but insisted the wealthy should pay more as the nation struggles with growing debt and stubbornly high unemployment.

The GOP contends the wealthiest Americans are not merely the idle rich but are entrepreneurs and business owners who would have to put off hiring -- or even lay off workers -- if their tax bill went up. Republicans have insisted on emphasizing tax and entitlement reform as the path to fiscal stability.

Geithner said the White House plan offers a balanced approach that would aid the overall economy.

"Our proposal is to let those rates go back to Clinton levels for 2 percent of the wealthiest Americans," he said on NBC's "Meet the Press. "Combine that with tax reforms that limit deductions for the wealthiest Americans. We think if you do that, alongside the spending savings, then you can put the country back on a much more responsible fiscal path."

Chris Wallace of "Fox News Sunday" asked Geithner about a comment by House Speaker John Boehner, R-Ohio, that the Obama administration proposal is not serious, and a report that Senate Minority Leader Mitch McConnell, R-Ky., laughed when the White House presented it to him.

"You know, Chris, they are in a kind of tough position now and it's going to be -- it's obviously a little hard for them now and they are trying to figure out where they go next and we might need to give them time to figure out where they go next," Geithner said.

"If they've got some different suggestions, they want to go further in some areas, then they should lay it out to us," Geithner said.

He said Republican congressional leaders are having difficulty "trying to figure out how to find a way to support things that they know they are going to have to do. That's going to be hard for them."

"What we can't do, Chris, is try to figure out what works for them."

On CNN's "State of the Union," Geithner expressed optimism Republicans will modify their staunch opposition to changing the Bush-era tax breaks given the serious political stakes.

"This is something we can do," he said. "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."

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