Geithner Says No Fiscal Deal Without Higher Tax Rates

U.S. Treasury Secretary Timothy F. Geithner said the Obama administration “absolutely” is willing to go over the fiscal cliff if Republicans don’t agree to raise tax rates on the highest-income earners.

“There’s no prospect to an agreement that doesn’t involve those rates going up on the top 2 percent of the wealthiest,” Geithner said in an interview on CNBC today.

Congress and the Obama administration, with Geithner as its lead negotiator, are trying to avert more than $600 billion in tax increases and spending cuts set to start in January.

“The size of the problem, in some sense, is so large it can’t be solved without rates going up,” he said. “There’s very broad recognition of that reality now.”

Geithner also told CNBC that there has been “a little bit of progress,” though “we’re still some distance apart.” The talks include “a bit of inevitable orchestrated drama.”

U.S. Senator Orrin Hatch, a Utah Republican, said Geithner’s comment that the administration is willing to go over the fiscal cliff “is one of the most stunning and irresponsible statements I’ve heard in some time. Going over the fiscal cliff will put our economy, jobs, people’s paychecks and retirement at risk, but that is what the White House wants, according to Secretary Geithner, if they don’t get their way.”

A few dozen Republican lawmakers have joined a bipartisan call to break the impasse between President Barack Obama and House Speaker John Boehner over taxes on the highest-earning Americans.

The Republicans signed a letter calling for exploration of “all options” on taxes and entitlement programs, a signal that some rank-and-file members are ready to bargain.

To contact the reporter on this story: Ian Katz in Washington at ikatz2@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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