Geithner: Fate of deficit talks rests in GOP hands

Geithner, appearing on all five political talk shows Sunday morning, pointed fingers at conservative Republican lawmakers, accusing them of potentially stymying a deficit-reduction deal.

On “Fox News Sunday,” Geithner told host Chris Wallace that he couldn't promise that White House and congressional negotiators will be able to stave off the automatic tax increases and severe spending cuts set to take place on January 1st. 

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"That's a decision that lies in the hands of the Republicans that are now opposing increases in tax rates. If they recognize the reality that we can't afford to extend those tax rates, then we have the basis for an agreement that would be good for the American people," Geithner said, referring to Republicans who don't want to allow the lower Bush-era tax rates to lapse for individuals making more than $250,000. 

Geithner continued: "Chris, ask yourself this question: why does it make sense for the country to force tax increases on all Americans, because a small group of Republicans want to extend tax rates for 2 percent of Americans, why does that make any sense?”

There's no reason why it should happen. We can't afford the tax rates. That's like the deep tragic lesson of the last decade. We can't afford them ...  we're not going to get to the end now without a recognition of the Republicans to that basic reality. And that's going to be the responsible thing to do," Geithner added. 

Speaker John Boehner (R-Ohio) was quick to acknowledge that Republicans would have to accept some form of revenue increases in any deal. But Republicans want those increases to come from closing loopholes and deductions, not from rate increases. GOP leaders are pushing to extend the expiring Bush-era rates across-the-board.

Current tax rates of 35 percent would bounce up to 39.6 percent if the rates expired for those making over $250,000. Reports said the idea of allowing those rates to increase to 37 percent has been discussed behind-closed-doors, however, Geithner ruled out that possibility on Sunday. 

Pressed on the 39.6 percent rate, the level that individuals paid under President Bill Clinton, Geithner responded, "we think that's the way to do it."