Timothy Geithner, the Secretary of the Treasury warned on Tuesday that extending all the tax breaks in the U.S. to give additional time to Washington to broker a deal for deficit reduction would only create additional uncertainty across all markets.
Congress and the White House Administration have just seven week to put together a deal over the “fiscal cliff,” the hundreds of billions in spending cuts and tax hikes that will take effect at the beginning of next year, which could cause the economy to enter a recession.
As lawmakers and the Obama Administration fight over the best way to put the nation on a fiscal path that is sustainable, many think tanks and lawmakers are arguing for additional time.Geithner however said the extra time would leave the uncertainty no one wants. Earlier in the day yesterday, President Obama and Geithner met the country’s largest labor union leaders and leaders of liberal groups where the campaign promise by Obama was repeated to increase taxes on the country’s wealthiest and to hold rates on taxes down on those that earn less than $250,000.
Geithner, at an event sponsored by the Wall Street Journal said the deficit could not be reduced over the long term without receiving more tax revenues. Geithner is expected to remain as the Secretary of the Treasury through the early part of next year in order to help Obama negotiate with the Congress.
Geithner told attendees that the White House administration proposed a package for fiscal reform that would increase revenues by $1.5 trillion through a mixture of modest rated hikes and reforms limiting the deductions on higher earners.