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CNBC Exclusive: CNBC Transcript: CNBC's Steve Liesman Sits Down with Treasury Secretary Timothy Geithner Today

Wednesday, 5 Dec 2012 | 5:43 PM ET

When: Today, Wednesday, December 5TH

Where: CNBC'S "Closing Bell with Maria Bartiromo"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Treasury Secretary Timothy Geithner today, Wednesday, December 5th at 4PM ET on CNBC's "Closing Bell with Maria Bartiromo." Following is a link to the video of the interview on CNBC.com: http://video.cnbc.com/gallery/?play=1&video=3000133550 . All references must be sourced to CNBC.

STEVE LIESMAN: MARIA, THANK YOU. I'M HERE WITH THE SECRETARY OF TREASURY AT A CRITICAL MOMENT IN THE NATION'S HISTORY AS WE APPROACH THE FISCAL CLIFF. MR SECRETARY THANK YOU FOR JOINING US.

GEITHNER: NICE TO SEE YOU STEVE.

LIESMAN: SPEAKER BOEHNER HAS PUT FORWARD A PROPOSAL WHICH "USA TODAY" SAYS DEMONSTRATES MORE POLITICAL COURAGE THAN THE DEMOCRATS HAVE SHOWN. AND THE "WASHINGTON POST" SAYS IS A FAR REACHING PLAN TO REIGN IN THE NATIONAL DEBT. IF THE WHITE HOUSE IS SAYING TODAY IT'S NOT EVEN WORTHY OF A RESPONSE. WHAT ARE WE MISSING HERE?

GEITHNER: I THINK WE ARE MAKING A LITTLE BIT OF PROGRESS. I MEAN WE ARE STILL SOME DISTANCE APART BUT THEY'RE CLEARLY MOVING AND TRYING TO FIGURE OUT HOW TO MOVE FURTHER. YOU'VE SEEN THEM ACKNOWLEDGED THEY ARE PREPARED TO DO $800 BILLION IN HIGHER TAXES ON PART OF THE AMERICAN ECONOMY. THAT'S PART OF THE BALANCED FRAMEWORK. THAT'S DEFINITELY SOME PROGRESS. WHAT WE NEED TO SEE IS HAVE THEM ACKNOWLEDGE THEY'RE PREPARED TO SEE RATES GO UP. IF THEY'RE WILLING TO ACCEPT THAT AND COMMIT TO THAT AS PART OF AN AGREEMENT, THEN WE THINK WE COULD DO SOMETHING REALLY GOOD FOR THE ECONOMY. WE CAN MAKE THE GOVERNMENT USE THE TAXPAYERS' MONEY MORE EFFICIENTLY, LOCK IN SOME SPENDING SAVINGS AND DO SOME LONG-TERM REFORMS IN ENTITLEMENTS TO MAKE SURE AMERICANS FEEL LIKE THEY CAN RETIRE WITH DIGNITY.

LIESMAN: I WANT TO MAKE SURE WE'RE TALKING ABOUT APPLES AND APPLES HERE, WHICH IS SO HARD IN THIS DISCUSSION. THE $800 BILLION WHICH THE REPUBLICANS PUT FORWARD, WHICH WOULD BE A CAP ON DEDUCTIONS, HOW DOES THAT COMPARE WITH HOW FAR THE ADMINISTRATION IS PREPARED TO GO WHEN IT COMES TO RAISING REVENUE FROM CAPPING DEDUCTIONS?

GEITHNER: WE DON'T ACTUALLY KNOW WHAT THE REPUBLICANS THINK THEY CAN DO IN THAT CONTEXT YET, BECAUSE THEY HAVEN'T TOLD US HOW THEY WOULD PROPOSE TO RAISE THE $800 BILLION. WE DON'T KNOW WHOSE TAXES WOULD GO UP IN THAT CONTEXT. WE DON'T KNOW WHAT MIX OF RATES AND LIMITATIONS AND DEDUCTIONS AND LOOPHOLES THEY WOULD SUPPORT. WE THINK THERE'S A GOOD CASE AS PART OF AN AGREEMENT ALONGSIDE INCREASED TAX RATES ON THE TOP 2% OF THE WEALTHIEST AMERICANS. WE THINK THERE IS A VERY GOOD CASE TO TRY TO LIMIT DEDUCTIONS AS WELL FOR THOSE AMERICANS AND WE THINK WITH THAT MIX OF RATES AND DEDUCTIONS, WE CAN REACH AGREEMENT ON SOMETHING THAT'S VERY GOOD FOR THE COUNTRY.

LIESMAN: DO YOU HAVE A NUMBER? IS THERE A NUMBER THAT THE ADMINISTRATION IS COMFORTABLE WITH WHEN IT COMES TO REVENUE FROM DEDUCTION CAPS?

GEITHNER: WHAT WE PROPOSED IS A 28% LIMITATION ON THE VALUE OF DEDUCTIONS AND EXCLUSIONS THAT THE TOP 2% OF THE WEALTHIEST AMERICANS COULD BENEFIT FROM. AND THAT ITSELF RAISES WITH THE RATE STRUCTURE WE PROPOSED MORE THAN $500 BILLION OVER TEN YEARS. SO THAT'S ONE APPROACH. WE THINK THAT'S A BETTER APPROACH THAN SOME OF THE OTHER PROPOSALS. AGAIN, IF THEY HAVE AN ALTERNATIVE, WE HAVE TO SEE IT.

LIESMAN: I WANT TO UNDERSTAND THE ADMINISTRATION'S POSITION WHEN IT COMES TO RAISING TAXES ON THE WEALTHY, THOSE MAKING MORE THAN $250,000. IF REPUBLICANS DO NOT AGREE TO THAT, IS THE ADMINISTRATION PREPARED TO GO OVER THE FISCAL CLIFF?

GEITHNER: OH, ABSOLUTELY. AGAIN, THERE'S NO PROSPECT IN AN AGREEMENT THAT DOESN'T INVOLVE THOSE RATES GOING UP ON THE TOP 2% OF THE WEALTHIEST OF AMERICANS. REMEMBER IT IS ONLY 2%. ALL THOSE AMERICANS TOO GET A TAX CUT UNDER THE FRAMEWORK UNDER THE FIRST $250,000 OF THEIR INCOME. SO IN SOME SENSE, IT'S A TAX CUT FOR ALL AMERICANS. IT'S JUST FOR PEOPLE WHO MAKE MORE THAN THAT, WE'RE GOING TO ASK THEM TO PAY A MODESTLY HIGHER AMOUNT MORE OF ADDITIONAL REVENUE ON TOP ON THE INCOME THEY EARN ABOVE $250,000.

LIESMAN: THAT'S A LITTLE HARD TO UNDERSTAND GIVEN HOW MUCH GOING OVER THE FISCAL CLIFF WOULD HURT THE ECONOMY. WHY IS GOING OVER THE FISCAL CLIFF WORTH IT FOR JUST THIS ONE COMPONENT? IF YOU CAN GET THE OTHER COMPONENTS, WHY WOULDN'T YOU TAKE THAT?

GEITHNER: GOOD QUESTION. THANKS FOR ASKING. WHAT WE'RE TRYING TO DO IS PUT IN PLACE A COMPREHENSIVE BALANCE SET OF FISCAL REFORMS THAT PUT US BACK ON THE PATH TO LIVING WITHIN OUR MEANS AND CREATE SOME ROOM FOR INVESTING AND THINGS TO MAKE THE ECONOMY STRONGER, MAKE SURE WE'RE PROTECTING MEDICARE FOR FUTURE GENERATIONS, THAT WE'RE FORCING THE GOVERNMENT TO USE THE TAXPAYERS' RESOURCES MORE WISELY. AND IN THAT CONTEXT, YOU HAVE TO HAVE A SIGNIFICANT AMOUNT OF REVENUES AS PART OF THAT DEAL. WE DON'T SEE A WAY OF DOING IT THAT MAKES ANY SENSE OR HAS ANY POLITICAL VIABILITY WITHOUT RATES GOING UP AS PART OF THAT DEAL. AGAIN, THE SIZE OF THE PROBLEM IN SOME SENSE IS SO LARGE IT CAN'T BE SOLVED WITHOUT RATES GOING UP AS PART OF IT. AND AGAIN I THINK THERE'S A BROAD RECOGNITION OF THAT REALITY NOW. IF YOU LISTEN CAREFULLY TO THE TALK NOT JUST IN THIS TOWN, BUT YOU HEAR WHAT BUSINESSES AND INVESTORS SAY, I THINK THERE'S BROAD A VERY RECOGNITION THAT RATES ARE GOING TO GO UP AS PART OF A DEAL. I THINK THAT'S A WELCOME CHANGE. THAT'S WHY I SAID AT THE BEGINNING I THINK THERE'S BEEN SOME PROGRESS, AND I THINK WE'RE GOING TO GET THERE.

LIESMAN: SO AGAIN, IF I COULD UNDERSTAND THE NEGOTIATING POSITION AS BEST I CAN HERE. RATES GOING UP ON THE TOP 2%, DOES IT HAVE TO GO UP TO 39.6, OR IS THERE SOME FLEXIBILITY IN THE ADMINISTRATION? COULD IT BE A 37% NUMBER?

GEITHNER: AGAIN WHAT WE'VE PROPOSED IS TO LET THE RATES GO BACK TO WHERE THEY WERE IN THE CLINTON ERA, WHICH WAS A VERY GOOD TIME FOR THE AMERICAN ECONOMY AS YOU KNOW. WE THINK THAT'S THE MIX AND THAT SHOULD BE COMPLEMENTED WITH SOME LIMITATIONS ON DEDUCTIONS AGAIN FOR THE WEALTHIEST 2% OF AMERICANS. AGAIN WE THINK THAT MAKES THE MOST SENSE. AS I'VE SAID BEFORE, I'M VERY SKEPTICAL. THERE'S A DIFFERENT WAY TO DO IT THAT WORKS ECONOMICALLY AND IS SOMETHING WE CAN GET THROUGH, GET VOTES FOR IN CONGRESS.

LIESMAN: JUST AS I UNDERSTAND IT, NOT RAISING RATES ON THE WEALTHY IS SOMETHING THAT YOU WOULD BE PREPARED TO GO ALL THE WAY ON IN TERMS OF GOING OVER THE CLIFF. BUT IS THE 39.6 NUMBER SOMETHING YOU WOULD BE WILLING TO GO ALL THE WAY WITH--

GEITHNER: AGAIN LET ME SAY IT A LITTLE DIFFERENTLY. CONGRESS NEEDS TO EXTENDS THOSE TAX CUTS FOR ALL AMERICANS. THEY NEED TO MAKE SURE NO AMERICAN WHO MAKES UP TO $250,000 A YEAR IS SEEING THEIR TAXES GO UP. THAT'S THE MOST IMPORTANT THING PEOPLE CAN DO. REMEMBER, OUR OBLIGATION IS FIRST DO NO HARM. WE NEED TO LIFT THAT THREAT OVER THE ECONOMY. AS PART OF THAT, ALONG SIDE THAT, WE'D LIKE TO PUT IN PLACE, AS I SAID, A CAREFULLY DESIGNED BALANCED MIX OF REFORMS TO PUT OUR FISCAL BALANCE IN A PATH OF SUSTAINABILITY. AS LONG AS THERE'S RECOGNITION ON THE OTHER SIDE THAT THOSE RATES ARE GOING TO GO UP AT THE END OF THIS YEAR, THEN WE THINK WE CAN REACH AN AGREEMENT ON A SET OF REFORMS, AS I SAID, WHICH WOULD BE GOOD FOR THE ECONOMY. BOTH THE NEAR-TERM STRENGTH OF THE AMERICAN ECONOMY AND THE LONG-TERM HEALTH OF THE ECONOMY.

LIESMAN: IS THE DEBT CEILING IN A SIMILAR PLACE AS RAISING TAXES ON THE WEALTHY? ARE YOU IN A PLACE WHERE IF THERE'S NO DEBT CEILING AS PART OF THIS LONG-TERM AGREEMENT THAT YOU WOULD WALK AWAY?

GEITHNER: YES. LET ME EXPLAIN WHY. YOU'VE HEARD THE PRESIDENT SAY THIS AND SPEAK VERY STRONGLY ON THIS. I SPENT A LOT OF TIME TALKING TO INVESTORS IN THE UNITED STATES, SMALL BUSINESSES, LARGE BUSINESSES. I THINK THERE'S VERY BROAD AGREEMENT WITH THE POSITION WE'RE TAKING, WHICH IS WE ARE NOT PREPARED TO HAVE THE AMERICAN ECONOMY HELD HOSTAGE TO PERIODIC THREATS THAT REPUBLICANS WILL FORCE THE COUNTRY TO DEFAULT ON OUR OBLIGATIONS. THAT WOULD BE A TERRIBLE THING FOR THE FINANCIAL SECURITY OF THE AVERAGE AMERICAN, FOR BUSINESSES, FOR CONFIDENCE AROUND THE WORLD AND THE UNITED STATES. WE ARE NOT PREPARED TO PUT THE ECONOMY THROUGH THAT. IT MAKES NO SENSE FOR THEM TO TRY AND DO THAT. AGAIN, IT'S JUST TOO DAMAGING. IF YOU LOOK BACK TO WHAT HAPPENED THE SUMMER OF 2011, YOU CAN JUST SEE HOW DAMAGING THAT WAS AT THAT TIME. WE'RE NOT GOING TO MAKE THE AMERICAN PEOPLE PAY THE PRICE AGAIN FOR A GROUP OF MINORITY REPUBLICANS THAT SAY THEY WANT TO THREATEN TO DEFAULT OCCASIONALLY.

LIESMAN: YOU SAID EARLIER YOU THINK THE REPUBLICANS HAVE GIVEN A BIT, OR AT LEAST MADE SOME PROGRESS IN TERMS OF MOVING TOWARD YOU. WHERE HAS THE ADMINISTRATION MOVED TOWARDS THE REPUBLICANS? WHAT IS IT MARKETS SHOULD BELIEVE IN THAT WE'VE BEEN THAT THE FOR A MONTH AND THE CHARACTERIZATIONS OF THE NEGOTIATIONS WE GET ARE SOMEWHERE BETWEEN BACKWARDS AND NOWHERE.

GEITHNER: AGAIN, THERE'S A BIT OF INEVITABLE ORCHESTRATED DRAMA IN THESE THINGS. THAT'S THE WAY IT WORKS. AND AS I SAID BEFORE THOSE REPUBLICANS IN LEADERSHIP HAVE A VERY TOUGH JOB NOW. THEY'RE IN A VERY TOUGH PLACE. THEY'RE TRYING TO FIND A WAY TO GET AGREEMENT AMONG THEIR CAUCUS ON A SET OF BASIC REALITIES NOW. THAT'S PART OF WHAT YOU'RE HEARING. JUST A BIT OF STORM AROUND THAT. IT'S INEVITABLE IN THAT KIND OF I THINK YOU SEE THE BROAD OUTLINES OF A FRAMEWORK NOW LOOK MORE INEVITABLE. THERE'S A LITTLE BIT OF MOVEMENT TOWARDS THAT BROADER RECOGNITION OF THAT. VERY STRONG SUPPORT FROM THE BUSINESS COMMUNITY FOR THAT BROAD OUTLINE.

LIESMAN: YOU MET WITH THE BUSINESS ROUNDTABLE TODAY WHAT DID THEY TELL YOU

GEITHNER: AS THE PRESIDENT DID. WE'VE BEEN SPENDING A LOT OF TIME WITH THEM AND A BROAD MIX OF INVESTORS, SMALL BUSINESSES. AGAIN, I'D SAY THERE'S BROAD SUPPORT OUT THERE FOR NOT JUST EXTENDING THESE TAX CUTS FOR 98% OF AMERICANS BUT FOR AN AGREEMENT THAT HAS RATES GOING UP WITH TAX REFORM TO LIMIT DEDUCTIONS ALONGSIDE A SET OF VERY SUBSTANTIAL, VERY DIFFICULT LONG-TERM SAVINGS ON THE SPENDING SIDE. VERY BROAD SUPPORT OF THAT AND NO SUPPORT ANYWHERE AS FAR AS I CAN TELL FOR REACHING AGREEMENT THAT LEAVES THE ECONOMY VULNERABLE TO PERIODIC THREATS OF DEFAULT.

LIESMAN: I WANT TO COME BACK TO THAT QUESTION. WHERE HAS THE ADMINISTRATION MOVED TOWARDS THE REPUBLICANS HERE? WHERE IS THE GIVE THERE? WHERE'S THE FLEXIBILITY?

GEITHNER: AGAIN, WHAT WE'VE SAID IS THAT IF REPUBLICANS RECOGNIZE THIS BASIC REALITY THAT RATES ARE GOING TO HAVE TO GO UP AS PART OF A BALANCED PLAN, THEN WE BELIEVE, AND WE WILL BE PREPARED TO DO A SUBSTANTIAL AMOUNT OF MEANINGFUL REFORMS AND SAVINGS ON THE SPENDING SIDE, INCLUDING ENTITLEMENTS. WE'RE GOING TO TAKE A CAREFUL LOOK AT HOW TO DO THAT. WE'RE GOING TO WANT TO MAKE SURE WE'RE PROTECTING SENIORS, NOT JUST SHIFTING MORE COST ON TO THEM. WE THINK THERE'S ROOM FOR MOVEMENT ON THAT SIDE PROVIDED THERE'S A RECOGNITION. AGAIN, WHY DOES THAT MAKE SENSE, STEVE? IF YOU LOOK AT HOW FAR WE ARE APART NOW WHAT REPUBLICANS ARE ESSENTIALLY SAYING IS WE'RE WILLING TO RAISE SOME REVENUE. WE DON'T KNOW HOW MUCH. WE DON'T KNOW WHOSE TAXES THEY WANT TO RAISE IN THAT CONTEXT. BUT NOT ENOUGH. WHAT THAT MEANS IS THE BALANCE OF THE AGREEMENT IS GOING TO HAVE TO RESULT IN MUCH, MUCH DEEPER SPENDING CUTS, WHICH INEVITABLY ARE GOING TO HURT THINGS THAT MATTER A LOT TO OUR ECONOMY TO MEDICARE SECURITY, TO THE RETIREMENT SECURITY, TO THE ABILITY OF PEOPLE TO GO TO COLLEGE, PROTECT OUR NATIONAL SECURITY. SO THE REASON WHY THIS DEBATE WE'RE HAVING ABOUT THE STRUCTURE OF AGREEMENT IS SO IMPORTANT IS WITHOUT THAT RECOGNITION THAT RATES ARE GOING UP, THERE'S GOING TO BE TOO MUCH OF A BURDEN ON THE REST OF THE PRIORITIES OF THE COUNTRY. WE DON'T THINK THAT MAKES SENSE. AGAIN, WE'VE SPENT A LOT OF TIME LOOKING AT THE ALTERNATIVES. WE'RE OPEN TO DIFFERENT WAYS OF HOW TO DO THIS. WE THINK THERE'S VERY BROAD SUPPORT FROM THE BUSINESS COMMUNITY, FROM INVESTORS FOR THE TYPE OF FRAMEWORK WE'VE LAID OUT.

LIESMAN: I HAVE TO ASK YOU SOMETHING OF DEEP CONCERN TO THE MARKETS, WHICH IS THE POTENTIAL INCREASES IN DIVIDENDS AND CAPITAL GAINS TAX RATES. WE'VE HAD $27 BILLION OF SPECIAL DIVIDENDS PAID THIS YEAR WHICH PROBABLY MEANS A PRETTY BIG FALL OF NEXT AMONG OTHER THINGS. BUT ALSO IF TAXES GO UP, WON'T THAT MEAN FEWER DIVIDENDS AND CAPITAL GAINS TAKEN IN THE ECONOMY?

GEITHNER: LET ME TELL YOU WHAT ONE PROPOSAL ON THE TABLE RIGHT NOW. THE SENATE PASSED A BILL, WHICH EXTENDS MIDDLE CLASS TAX CUTS FOR 98% OF AMERICANS. THEY ALLOW THE MARGINAL RATES ON EARNED INCOME TO GO BACK TO THE CLINTON LEVELS. IN THAT PROPOSAL, AS I UNDERSTAND IT, DIVIDENDS AND CAP GAINS RISE MODESTLY TO 20%. I THINK ANYBODY THAT'S LOOKED THAT THE WILL TELL YOU THE MIX OF RATES AND DEDUCTIONS AND TAX TREATMENT OF DIVIDENDS, CAPITAL GAINS NOW IS UNAFFORDABLE FOR THE COUNTRY. THE CURRENT MIX WE HAVE IN CURRENT POLICY IS UNAFFORDABLE. WE'RE GOING TO HAVE TO ALTER THAT MIX. WE'VE LAID OUT THE BEST WAY WE THINK TO DO THAT. IF WE DID THAT, I THINK YOU'D SEE ALONGSIDE SENSIBLE SPENDING REFORMS. YOU'D SEE VERY GOOD OUTCOMES FOR THE AMERICAN ECONOMY. THE AMERICAN ECONOMY RIGHT NOW LOOKS VERY RESILIENT. THE BIGGEST THING THAT STANDS IN THE WAY OF MUCH SIGNIFICANT STRENGTH IN GROWTH HERE NOT JUST IN THE NEAR TERM BUT THE LONG RUN IS THIS UNCERTAINTY ABOUT HOW TO REACH AN AGREEMENT ON A SENSIBLE FISCAL PACKAGE.

LIESMAN: WHAT'S THE RIGHT RATE FOR DIVIDENDS AND CAPITAL GAINS?

GEITHNER: IN THE SENATE BILL, YOU SEE THERE'S A PROPOSAL TO LET THEM GO TO 20. KEEP THEM TOGETHER. THAT'S CERTAINLY ONE WAY TO DO IT. ULTIMATELY, YOU HAVE TO LOOK AT THE OVERALL MIX OF TAX TREATMENT, INVESTMENT INCOMEā€¦

LIESMAN: IS THERE A NUMBER THAT'S TOO HIGH? SHOULD THEY BE TREATED AS ORDINARY INCOME IN YOUR OPINION?

GEITHNER: SOME PEOPLE SAY THAT. THERE'S BEEN A LOT OF BIPARTISAN PROPOSALS OUT THERE THAT WOULD PROPOSE THAT. BOWLES/SIMPSON IS ONE OF THEM. RIVLIN DOMENICI IS ANOTHER ONE OF THEM THAT HAS BROAD SUPPORT BUT WE'RE GOING TO LOOK AT THE OVERALL MIX. AND OF COURSE WE WANT SOMETHING THAT'S GOING TO HAVE A GOOD, STRONG INCENTIVE FOR FUTURE INVESTMENT AND A STRONG GROWTH COMPONENT. CAN I JUST MENTION ONE THING?

LIESMAN: SURE.

GEITHNER: AGAIN WE'RE TRYING TO MAKE SURE WE'RE DOING SOMETHING THAT'S GOING TO BE GOOD FOR ECONOMIC GROWTH IN THE COUNTRY IN THE INTEREST OF THE AVERAGE AMERICAN. SO WE THINK AS PART OF A BALANCED FRAMEWORK, WE THINK THERE'S GOING TO BE SOME ROOM TO MAKE SOME INVESTMENTS IN EDUCATION AND INFRASTRUCTURE, THINGS THAT ARE GOOD FOR THE LONG-TERM GROWTH PROSPECTS OF THIS ECONOMY. WE'RE GOING TO LOOK AT THE OVERALL MIX THROUGH THAT BASIC PRISM ABOUT WHAT'S GOING TO BE GOOD FOR ECONOMIC GROWTH HERE IN THE UNITED STATES.

LIESMAN: I WANT TO ASK ONE FINAL QUESTION ABOUT LEADERSHIP. THE CENTER PIECE OF YOUR STANCE ON THE NEGOTIATIONS IS TO RAISE TAXES ON THE WEALTHY.

GEITHNER: NO THAT'S NOT THE CENTER PIECE OF OUR PLAN. THE CENTER PIECE IS A BALANCED MIX OF SPENDING REFORMS AND TAX REFORMS THAT PRESERVE THE ABILITY FOR US TO INVEST IN THINGS THAT ARE ABSOLUTELY ESSENTIAL TO OUR ABILITY TO GROW IN THE FUTURE.

LIESMAN: BUT SO FAR, WHEN IT COMES TO RAISING TAXES ON THE WEALTHY, ONE THING WE KNOW ABOUT THAT FROM ALL THE POLLS IS IT'S VERY POPULAR. IT'S NOT SOMETHING IN WHICH YOU'RE EXPENDING POLITICAL CAPITAL TO MAKE THAT HAPPEN. TELL ME AGAIN WHERE THE PRESIDENT IS EXERCISING LEADERSHIP --

GEITHNER: I WOULDN'T SAY -- IT'S NEVER POPULAR AS YOU KNOW. LOOK AT THE HISTORY OF AMERICAN POLITICS THE LAST 30 YEARS OR THE LAST 40 YEARS. NEVER POPULAR TO DO WHAT THIS PRESIDENT DID, WHICH IS TO TRY TO EXPLAIN WHY IT'S IMPORTANT FOR THERE TO BE A MODEST AMOUNT OF TAX INCREASES ON THE MOST FORTUNATE FEW AMERICANS WHO HAVE DONE VERY IN THE LAST DECADE AS PART OF A BALANCED FRAMEWORK. AGAIN WE'RE NOT PROPOSING TO SIMPLY TRY TO RAISE TAXES ALONG THIS CONTEXT. WE'RE TRYING TO MAKE SURE WE DO THAT IT ONLY ALONGSIDE A SET OF REFORMS AND INVESTMENTS SO BOTH SIDES CAN BE CONFIDENT THAT THE SACRIFICES THEY'RE MAKING CAN PRODUCE A FRAMEWORK THAT'S BETTER FOR HOW THE ECONOMY GROWS GOING FORWARD.

LIESMAN: I WANT TO COME BACK TO THAT ONE ISSUE. WHERE HAS THE PRESIDENT EXPENDED POLITICAL CAPITAL? ON WHICH PARTICULAR ISSUE SO FAR HAS HE DONE SOMETHING THAT IS UNPOPULAR? CUTTING MEDICARE, CUTTING MEDICAID, RAISING THE RETIREMENT AGE. THOSE ARE THE THINGS THE POLL SHOWS IS VERY UNPOPULAR.

GEITHNER: AS YOU KNOW WE'VE PROPOSED $600 BILLION IN SPENDING REFORMS TO ENTITLEMENTS, HEALTHCARE ENTITLEMENTS, OTHERS YOU LOOK AT THE POLITICS OF EACH OF THOSE REFORMS. YOU'LL FIND THEY WERE EXCEPTIONALLY UNPOPULAR AMONG SIGNIFICANT NUMBERS OF AMERICANS. THE PRESIDENT BELIEVES, AS I DO, THAT A MIX OF REFORMS LIKE THAT ARE GOING TO BE NECESSARY AS PART OF AN AGREEMENT THAT PUTS US ON A BETTER PATH TO A STRONGER ECONOMY. I THINK WE'RE MAKING SOME PROGRESS, STEVE. A BIT OF DISTANCE APART BUT I THINK THE BROAD OUTLINES OF A FRAMEWORK NOW THEY LOOK INEVITABLE. I THINK THAT'S ENCOURAGING, EVEN THOUGH WE HAVE A BIT OF A WAYS TO GO.

LIESMAN: THANK YOU FOR JOINING US. I WISH YOU WITH LUCK IN YOUR NEGOTIATIONS.



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