WASHINGTON (AP) — The administration is taking a tough line on the “fiscal cliff” at the same time President Barack Obama resumes contact with House Speaker John Boehner over ways to avert across-the-board spending cuts and tax increases at the turn of the year.
The administration will “absolutely” let the double whammy take effect as scheduled unless Republicans give in to Obama’s demand to raise tax rates at upper income levels, Treasury Secretary Tim Geithner said Wednesday. “The size of the problem is so large it can’t be solved without rates going up,” he told CNBC.
Geithner drew a fierce response from Republicans. Sen. Orrin Hatch of Utah called his statement “stunning and irresponsible.” He added, “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.”
Economists inside and outside the government warn that failing to reach agreement on taxes and spending could land the economy back in recession.
It wasn’t the only demand from the administration on a day Obama telephoned Boehner, the first known discussion of the fiscal cliff between the two in several days.
The president, appearing before corporate CEOs, warned Republicans not to inject the threat of a government default into negotiations over the fiscal cliff as a way of extracting concessions on spending cuts. “It’s not a game I will play,” he said, recalling the brinkmanship of last year in which a budget standoff pushed the Treasury to the edge of a first-ever default.
Obama will visit a northern Virginia family today to highlight his call for extending current tax rates to all but the top 2 percent of earners. The White House said a member of the family wanted to “share her story about how paying $2,200 more in taxes next year would impact them if Congress doesn’t act.”
Both sides say they want a compromise, although the administration’s hand in bargaining is strengthened by polls showing public support for Obama’s position on taxes, as well as by his re-election last month. The president is also working to rally the public to his side and has a trip scheduled to Detroit next week.
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