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Geithner urges Republican leaders to offer ideas on averting fiscal cliff

Updated 11:43 am ET President Barack Obama’s fiscal cliff negotiator, Treasury Secretary Tim Geithner, predicted on NBC’s Meet the Press Sunday that congressional Republicans will accept Obama’s plan to raise income tax rates and limit deductions on people making $200,000 and over. “I think we’re going to get there,” he told NBC’s David Gregory.

He said if Republican leaders have their own alternative ways to reduce federal deficits, they need to offer Obama their proposals.

Treasury Secretary Timothy Geithner made the Sunday morning talk show rounds, saying "the only thing that stands in the way of a deal right now is if a group of Republican members decide they're going to block a deal." NBC's Mike Viqueira reports.

“We need to know what they’re prepared to do on (tax) rates and revenues and we need to know what they’re prepared to do on the spending side,” he said.

So far, Geithner said, they have not said “who should pay higher taxes.”

In contrast, Geithner said, Obama has been specific, for example, about how he’d shift more of the burden of paying for Medicare to affluent retirees: his fiscal year 2013 budget proposal would increase premiums and co-payments for higher-income Medicare beneficiaries, starting in 2017.

“If the Republicans don’t like those ideas and they want to do it differently (or) they want to go beyond that, then they have to tell us what makes sense for them and then we can take a look at it,” he said.

Geithner is leading the bargaining with GOP leaders on how to avoid the “fiscal cliff” –Washington jargon for the combination of tax increases and spending reductions which are scheduled to occur under current law at the end of the year and which the Congressional Budget Office has said would tip the economy into a recession.

Treasury Secretary Tim Geithner and Sens. Bob Corker and Claire McCaskill detail the ins and outs of the efforts to reach a deal to avert the fiscal cliff.

With 29 days left to reach an agreement on avoiding the fiscal cliff, neither GOP leaders nor the president seem to be taking steps toward an accord.

Two senators who were re-elected last month, Sen. Claire McCaskill, D- Mo., and Sen. Bob Corker, R- Tenn., also appeared on Meet the Press to comment on the fiscal cliff negotiations.

Corker said he supported “closing loopholes” which he called "a pro-growth way of getting more revenues from wealthy Americans." He predicted that ultimately “cooler heads will prevail” and the two sides will agree on a deal.

Corker said that in the fiscal cliff bargaining Obama had not yet proposed additional curbs on Medicare and other entitlement spending and he predicted “you’re not going to have a deal until that happens.”

McCaskill said if current tax rates expire at year end, then “we would come back in January first thing and pass a tax cut” along the lines of Obama’s proposal. “Are the Republicans going to vote ‘no’ on that?” she asked incredulously.

On Medicare, McCaskill said she would support “more aggressive means testing from higher co-pays from those people who can afford it.” In his Fiscal Year 2013 budget blueprint Obama proposed higher premiums and co-payments for higher-income Medicare recipients, cutting $28 billion in federal spending over ten years.

Americans for Tax Reform founder Grover Norquist discusses remarks made by Treasury Secretary Tim Geithner on Meet the Press.

But liberal Democrats have opposed that idea, saying it could erode support for Medicare among upper-income people, leading them to opt out of the program. “This will end Medicare as we know it,” said Rep. Allyson Schwartz, D- Pa., last spring when Republicans adopted Obama’s higher premium and co-pays idea as part of the negotiations over how to offset the cost of cutting the Social Security payroll tax.

Obama’s initial fiscal cliff bargaining position has been that income tax rates and tax preferences enacted since 2001 should remain in effect for single earners making less than $200,000 a year and for married couples filing joint return who make less than $250,000.

In a statement Sunday, House Democratic Leader Nancy Pelosi urged House Speaker John Boehner to bring to the floor a bill already passed by the Senate to continue current income tax rates for people making less than $200,000.

She said if Boehner "refuses to schedule this widely-supported bill for a vote, Democrats will introduce a discharge petition to automatically bring to the floor the Senate-passed middle class tax cuts." A discharge petition is procedure by which a bill may be forced out of a committee and onto the House floor for a vote. The Democrats would need to get 218 members of the House to sign a discharge petition in order for this procedure to succeed.

Republican leaders oppose any tax increase, although they would agree to a redesign of the income tax system that could raise more revenues for the federal government by ending or curtailing some deductions and other tax breaks.

The GOP leaders also want some plan for reductions in spending on Medicare and other entitlements.

The fiscal cliff refers to:

  • The expiration at year end of tax reductions enacted in 2001, 2003, 2009, and 2010.
  • A 27 percent cut in Medicare’s payment rates for doctors’ services.
  • A ten percent cut in defense spending and an 8 percent cut in nondefense spending -- cuts mandated by the Budget Control Act which Obama signed into law in 2010 as a part of a deal with Republicans to get them to agree to raise the federal government’s borrowing limit.
  • The end of emergency unemployment benefits.
  • The end of a temporary reduction of 2 percentage points in the Social Security payroll tax which was in effect this year and in 2011.

In addition the Affordable Care Act will impose, starting in January, a new 3.8 percent Medicare payroll tax on income above $200,000 and will expand the tax to cover investment income as well as wage and salary income.

About two-thirds of the fiscal cliff comes from the impending tax increases scheduled to take effect at the beginning of 2013 under current law.

According to the nonpartisan Tax Policy Center, "Taxes would rise by more than $500 billion in 2013—an average of almost $3,500 per household—as almost every tax cut enacted since 2001 would expire."

A report issued in October by the Center found that almost 90 percent of Americans would see their taxes rise unless Congress and the president agree to change current law. "For most households, the two biggest increases would be the expiration of the temporary cut in Social Security taxes and the expiration of the 2001/2003 tax cuts," the report said.