CBS "Face the Nation with Bob Schieffer" - Transcript

Interview

By:  Timothy Geithner
Date: Dec. 2, 2012
Location: Unknown

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GEITHNER: I do think we're going to get there, because the only thing that stands in the way of an agreement that's good for the American economy is if a group of Republicans decide they're going to block any increase in tax rates on the wealthiest Americans. I think it's unlikely they choose to do, that of course, because there's so much at stake.

SCHIEFFER: But I mean, in all seriousness, I'm told that Mitch McConnell laughed when you handed him this proposal. Is that in fact true?

GEITHNER: People say it's really - he smiles, but again - and you know they're in a hard position, Bob, you know they really are in a difficult position. And they're going to have to figure out their politics of what they do next. And they're trying to figure that out right now. But you know we're going to work very hard at this. And we're going to keep talking to each other. And, again, I think we have a very good chance for coming together on an agreement that not just protects 98 percent of Americans from a tax increase and protects the economy from deeply damaging upfront spending cuts and protects the economy from leaving us vulnerable to, you know, periodic threats of defaults by politicians, I think we can do better than that and do something good for the long-term future of the American economy.

SCHIEFFER: Do you think Democrats will support these tax increases?

GEITHNER: The tax increases in the president's plan? Oh, yeah, absolutely.

SCHIEFFER: You do?

GEITHNER: Again, if you listen carefully to the political debate, there's very broad-based support now and recognition of the need to let rates go up. We think they should go back to the Clinton levels and combine that with some tax reforms that limit deductions for the wealthiest Americans. But that's an essential part of any balanced agreement to bring down (inaudible). Now that's not enough. We think we can go beyond that and lock in some carefully designed savings that helps us go back to living within our means. And the president has laid out a very detailed, comprehensive plan for how best to do that. He has put on the table it $600 billion in savings on top of the $1 trillion that we enacted last year. And they're very detailed. And they're very well designed.

SCHIEFFER: But what gives you reason for optimism? I mean, Speaker Boehner says this is basically a stalemate.

GEITHNER: It's true that we're still a bit apart. And they're going to have to move further. And they're trying to figure out, again, what they do next in this context. Again, we've given them a very detailed, comprehensive set of proposals. We're open to suggestions on how to do it differently. If they want to come back and say we'd like you to do this differently, do more of this, then they should lay this out for us.

SCHIEFFER: What is it what cannot change in your plan?

GEITHNER: Oh, in our plan?

SCHIEFFER: Yeah.

GEITHNER: Oh, well.

SCHIEFFER: You said you're ready to talk.

GEITHNER: Yeah, of course we are. In the end, the president has said this over and over again just from from the beginning. Again, we've laid out in detail what we think makes the most sense for the American economy today. Again, you know not just extend the middle class tax cuts, but put in place some carefully designed savings to bring downtown long-term deficits and we should do ethics help growth in the short term like rebuilding America's infrastructure, helping Americans refinance their mortgages, extending unemployment benefits, those are things that make a lot of sense. We can afford them. We show a way to pay for those in our plan in that context. That's what we think makes the most sense. Now of course, we're open to suggestions. Now there's going to be other ideas from Democrats, there's going to be other ideas from Republicans. We can take a look at those ideas and evaluate them but not until we see them.

SCHIEFFER: Bottom line, though, is you're going to -- you're going to have to have more revenue and you expect to get it from upper income Americans. You think they ought to pay more.

GEITHNER: We're going to have higher rate and higher revenue interest just 2 percent of Americans. 98 percent of Americans do not need to see, and are not going to see, an increase in their marginal tax rates. That's a very important commitment of the president in this context. And again I think we're going to get there. The Republicans as you've heard have conceded -- and this is important - that they're prepared to raise revenues, raise taxes as part this deal but they haven't told us how far they're willing to go both on rates and other deduction limitations.

SCHIEFFER: Aren't you going to have to somewhere along the line, though, talk about entitlements and reforming entitlements?

GEITHNER: Absolutely. And the president is committed to that. And as I said, we put...

SCHIEFFER: But you don't have any of that in this plan.

GEITHNER: No, that's not true. We put out detailed reforms to entitlements that total $600 billion over 10 years that build gradually over time because they're phased in carefully. So the outer year savings will be larger than that, in that context. We think they're very good policy. Now Republicans don't like some of those proposals and some Republicans, apparently, want to go beyond that. But what they have to do is tell us what they're prepared to do. And what we can't do, Bob, is sit here and try to guess what works for them.

SCHIEFFER: Well, what is it that you propose to reform?

GEITHNER: I'll give you just a couple of examples. Reforming farm subsidies, very important to do, lots of room to do sensible reforms in that context. And they can raise substantial amounts of money. In health care, we propose to a modest increase in premium for higher income beneficiaries and we propose ways to make the government much smarter about how it buys medicine for Medicare beneficiaries.

SCHIEFFER: Why did you choose to basically say "we're going to stop letting congress have the ability to raise the debt ceiling."

GEITHNER: We are not prepared to let the threat of default on America's credit, the savings of Americans, the investments of Americans be held hostage to the political agenda of a group of people in congress over time. As you saw last August, that was very damaging to the American people. It's not the responsible way to govern.

SCHIEFFER: Are you betting that eventually the Republicans will cave on the taxes?

GEITHNER: There's no -- there's no path to an agreement that does not involve Republicans acknowledging that rates have to go up for the wealthiest Americans.

SCHIEFFER: You're saying you can't do it just by eliminating deductions and other...

GEITHNER: Very good question. You know, we've taken a careful look at this, and we think we should limit deduction but if you look carefully at how to do this, there is no way to raise a meaningful amount of revenue, relative to the sights of our fiscal challenges, by just limiting deductions for wealthy Americans. There's just not enough room there. You can raise a the lot of money if you're prepared to raise taxes significant she on middle class families by limiting their deductions, but we don't think that makes a lot of sense for them.

SCHIEFFER: Are you confident that you can find a way to stop going - stop us from going over this cliff? Can you figure out some kind of an agreement, beyond just kicking it down want road?

GEITHNER: I think we can, and we have a responsibility to do that. And, again, there's nothing that stands in the way of that agreement, except for the potential risk that a group of Republicans decide, they hold up an agreement because they wanted to extend tax cuts for the wealthiest Americans that we can't afford. Just remember to extend those tax cuts costs $1 trillion over 10 years. There is no way we can get to a balanced plan that puts us back on the path of living within our means, protects Medicare, invests in things we need, if you extend those tax rates.

SCHIEFFER: All right. Mr. Secretary, thank you so much.

GEITHNER: Thank you, bob.

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