Treasury Secretary Timothy F. Geithner said he’s confident an agreement on averting the fiscal cliff can be concluded within weeks after White House talks between President Barack Obama and congressional leaders.
“It was a good meeting, and the tone was very good,” Geithner said in an interview yesterday in Washington on Bloomberg Television’s “Political Capital With Al Hunt” airing this weekend. “I think this is doable within several weeks.”
Geithner said a deal must be reached soon to prevent further damaging consumer confidence. The lack of agreement is “this huge cloud of uncertainty hanging over the economy,” he said. As the peak of holiday shopping season approaches, “You’d want to do it as soon as you can.”
“This is within our grasp, within our reach,” Geithner said. “It’s not that complicated.”
Geithner repeated the administration’s calls for an immediate extension of middle-class tax cuts, and said a deal on high-end tax cuts shouldn’t be delayed.
“I think deferring things doesn’t work,” he said. “You know, we’ve had several periods now where there was a choice made to defer.”
He said the administration is trying to “make sure we do some things up front that help the economy, avoid damage to the economy, lock in some up-front savings that help restore fiscal sustainability, and set up a process for reaching agreement on the additional savings that we’re going to need.”
On the Table
Geithner and Obama began a new round of deficit-reduction talks yesterday with top Republicans and Democrats in a bid to avoid the combination of $607 billion in automatic tax increases and spending cuts that threatens to throw the country into a recession next year. House Speaker John Boehner said after the talks at the White House that Republicans are willing to put revenue on the table in exchange for spending cuts.
“You have to look at how much revenue do you need to make sure you have a balanced deal to get this back to the point we’re living within our means,” Geithner said in the interview. “That’s going to require a substantial amount of revenue, we think in the neighborhood of $1.5 trillion to $1.6 trillion.”
The Standard & Poor’s 500 Index climbed 0.5 percent to close at 1,359.88 at 4 p.m. in New York after Boehner’s comments. Treasuries rose, with 10-year note yields touching a 10-week low.
The administration also must negotiate to increase the federal debt ceiling. The Treasury said Oct. 31 it expects to reach the limit near the end of this year and can take “extraordinary measures” to meet its payment obligations “until early in 2013.”
Geithner said in the interview the debt ceiling should be eliminated, and “the sooner the better.” Without an increase in the ceiling, the government may not be able to pay all of its bills and risks defaulting on its debt. Congress and the Obama administration debated the limit for months last year before reaching an 11th-hour agreement in August 2011.
Under some readings of the tax code, Geithner could have the authority to blunt the economic impact of higher marginal rates by leaving this year’s paycheck withholding rules in place. Such a move carries risk because taxpayers could face higher tax bills and penalties in early 2014 if Congress can’t ultimately agree to extend the lower rates.
“Don’t over-interpret what that authority gives me,” Geithner said. He said he doesn’t have the power to let Congress “avoid making some decisions on rates and policy.”
Geithner said he agreed with Michael Duke, chief executive officer of Wal-Mart Stores Inc., that consumers need a quick agreement on the fiscal cliff.
“The uncertainty right now about whether this will be resolved on sensible terms, whether our middle-class families will see their taxes go up, already is having an effect on consumer confidence and the economy,” he said.
Geithner, 51, said he will stay in his post until mid-January, and he brushed aside suggestions that he might stay longer if a successor isn’t confirmed by then.
He said he’s “very confident that we’re going to get enough done in these next few weeks” and that Obama will “have a successor in place so I’ll be able to go off and do some other things.”
In June 2011, Geithner said he would start commuting to Washington from New York because his son was returning there to finish high school. He told White House officials that he was considering leaving office once a deal to raise last year’s debt limit was reached in Congress. Obama asked him to stay, and Geithner agreed to remain at the Treasury at least through the 2012 election.