Geithner: U.S. ‘Can’t Afford’ Bush Tax Cuts for Wealthy

• May 17, 2012, 9:01 AM

By Damian Paletta

Treasury Secretary Timothy Geithner on Thursday said the U.S. “can’t afford” to extend the Bush-era tax cuts for the upper-income when they expire later this year, as he spelled out the Obama administration’s economic views in a speech to the Greater Baltimore Committee in Maryland.
Mr. Geithner’s speech touched on a number of key fiscal and economic issues. Here are some takeaways:
1) President Barack Obama has said he wants to extend the Bush-era tax cuts only for those families earning less than $250,000 and he’s vowed to veto any bill that tries to extend the tax cuts for the upper income as well. Speaker of the House John Boehner (R., Ohio) said Tuesday the House would vote this fall to extend all of the tax cuts. Mr. Geithner made the economic argument Thursday why the White House won’t accept such a proposal.
“The cost of extending the Bush tax cuts for the top 2% of earners for the next decade is about $1 trillion. Tax cuts don’t pay for themselves. You have to pay for them. We can’t afford to borrow the money to extend those tax cuts, and we won’t agree to cut benefits for seniors or cut investments in education to pay for those tax cuts.”
2) He took another swipe at Republicans in his speech, blasting those who he said pose “serial threats to default on the nation’s credit.” Mr. Boehner on Tuesday also said Republicans would only support an increase in the debt ceiling if it was accompanied by large spending cuts. Here’s Mr. Geithner’s full response:
“These challenges cannot be solved by an economic agenda of severe, immediate austerity, combined with deep, permanent cuts in education and the safety net for retirees, caps on spending that could not plausible accommodate the 25 million Americans who become eligible for Medicare and Social Security over the next 15 years, opposition to financial reforms, irresponsible promises to cut taxes, and serial threats to default on the nation’s credit.”
3) Mr. Geithner said the economy is “gradually getting stronger” and he said the Obama administration and financial regulators deserved credit for “these encouraging improvements.” But he also laid out what he views as the risks and challenges facing the economy. The risks included uncertainty in Iran and Europe’s ongoing problems. The challenges included “diminished confidence in the ability of Americans to exceed the economic achievements of their parents.”
4) He says the U.S. must address the country’s fiscal problems but he argued multiple times against Europe-style austerity. “A credible strategy for economic growth requires a willingness to do things, not just to cut things,” he said.
5) For the second time in three days, he lauded the 2010 Bowles/Simpson deficit reduction plan and said the White House’s fiscal proposal to cut spending and raise taxes was built on a similar mode. The reference to Bowles/Simpson is key because the White House has made a concerted effort in recent months to move closer to that plan, at least politically, after giving it a lukewarm reception initially.