-Had Good, Constructive Meeting w/Hill Leaders, Committed to Deal
-Preventing Middle Class Tax Increase Most Important Thing to Diffuse Risks

WASHINGTON (MNI) – Treasury Secretary Tim Geithner said the administration
had “constructive” talks with Hill leaders Friday on preventing the fiscal
cliff, and he stressed that the goal must be to prevent damage to the economy,
and extending middle class tax cuts are the best way to achieve that.

In the transcript of an interview with Al Hunt, host of Bloomberg’s
Political Capital, Geithner said leaders are committed to reaching a deal, which
he said much lock in up front savings.

“It was a good meeting, and the tone was very good. And you heard each of
the leaders say coming out that it was a very constructive meeting,” he said of
the White House meeting, the first since the election. “You know, they said what
you’d hope for them to say at this point, which is that this is something we can
do, we’re committed to do it, we want to do it as soon as we can, we know the
stakes are very high.”

Geithner said he believes President Barack Obama’s focus on extending the
Bush-era tax cuts for middle class families – but allowing rates to return to
their previous level for those making $250,000 or more – will prevail, and is
the best course.

He stressed that “we want to do things that are going to help make the
economy stronger in the short term. And so extending these middle-class tax cuts
are central that. That’s probably the most important thing you could do to
defuse many of the risks in the fiscal cliff.”

The talks also will aim to replace the sequester – drastic,
across-the-board spending cuts set to kick in Jan. 1 – “with something that is
better designed mix of savings for the long term that stays in more gradually,
he said.

In addition, though, any deal would have to “lock in upfront, enough
savings so that people believe there’s going to be meaningful change ahead,” he
said.

And further delay would be a “mistake,” he said, because “you leave this
huge cloud of uncertainty hanging over the economy. And more importantly,
perhaps, you reduce the incentives both sides now have to come together.”

While the situation remains uncertain it “already is having an effect on
consumer confidence and the economy.”

“What we just need is people to come with a spirit of compromise and
recognize that there’s going to be hard things on both sides, but there’s lots
of ways” to accomplish what needs to be done, Geithner said. “I think you can do
a lot in a lame-duck session.”

However, he dismissed the notion Treasury could do an end run around
Congress by instructing the IRS to stop payroll withholding on the first
$250,000 of earnings.

“Don’t over-interpret what that authority gives me,” Geithner said of the
Treasury’s role in supervising the IRS. “Again, it does not give me the
authority … to let them avoid making some decisions on rates and policy.”

He also said he agrees with former Federal Reserve chair Alan Greenspan
that the debt limit should be abolished, but that is something only Congress can
accomplish.

Repeating his pledge to stay in his position only until mid-January,
Geithner said he expects the President will have a replacement ready by then.

** MNI Washington Bureau: 202-371-2121 **

–email: hscott@mni-news.com

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