Geithner says in House hearing that the GOP ‘not ready’ for tax code overhaul

Treasury Secretary Timothy Geithner clashed with GOP leaders of the House Ways and Means Committee on Wednesday over taxes during a tense hearing where Republicans criticized the administration for not offering a detailed proposal to tackle the tax code. 

Committee Chairman Dave Camp (R-Mich.) hit Geithner over the administration’s plan to raise taxes by $1.5 trillion over 10 years on the nation’s highest earners without outlining a tax reform plan.

“We’ll see a unicorn before we see a comprehensive tax reform plan,” Camp said. 

{mosads}Geithner, who faced similar questioning on Tuesday with the Senate Finance Committee, took a hard tack under sharp questioning from panel Republicans, telling Camp it was obvious that Republicans “weren’t ready” for tax reform during debt-limit discussions last summer between President Obama and House Speaker John Boehner (R-Ohio). 

“We had extensive detailed discussions on individual tax reform and we took a run at it but, to be fair, you guys were not ready,” Geithner said.

Geithner told Camp that “your side left the table three times” during those debt-limit talks, leading the administration to conclude that the gap between the White House and congressional Republicans is too great to be bridged at this time. 

But Camp, who said he wasn’t part of those closed-door discussions last summer, told Geithner “not to go there” and that the White House should have taken the initiative in its budget plan to at least outline a comprehensive tax reform proposal that could start discussions.  

The exchange continued with ranking member Sandy Levin (D-Mich.) saying that the chairman shouldn’t suggest that Geithner “not go there” after “he went there.” 

In an election year, most lawmakers have conceded that any plan wouldn’t get the needed attention and would, at most lawmakers’ best guesses, take years to hammer out. 

Rep. Jim McDermott (D-Wash.) said the tax agreement during the Reagan administration took six years of “golf, cigar smoking and drinking whiskey” between the White House and congressional leaders to reach an agreement.

The secretary said the White House is as interested as the GOP in moving forward
on a tax plan but that right now, there are two very different ideas on how
to go about simplifying the tax code.

He did reiterate that the administration will provide a “broad framework” on corporate tax reform within the next few weeks. Although he wouldn’t provide any details, he said he “wants to bring down the rate to an average of our major competitors.”

Geithner told the panel that without raising taxes on wealthier earners the administration would be forced to chose between cutting Medicare, low-income programs, infrastructure spending and national security — “all cuts that you’re not prepared to support.” 

“So to get more revenues out of current tax system who is in the best position to bear the burden,” Geithner asked. 

Geithner argued the deficit is too high and unsustainable, and that with “a huge set of other challenges” it is impossible not to propose an increase in taxes to raise revenues.

“We don’t come to it with enthusiasm but it’s a sober, responsible recognition of the fiscal reality we face,” he said. “We have to cut $4 trillion in 10 years.”

The president’s budget proposal included a number of tax increases targeting the wealthy, including higher taxes on investment dividends and capital gains. The president also called for Congress to enact the so-called “Buffett Rule,” ensuring millionaires pay at least 30 percent of their income in taxes, although it was not officially included in the budget proposal.

The discussion got heated again when Republican Rep. Dave Reichert (Wash.) pressed Geithner on details of the corporate tax reform policy, asking how the administration would protect small businesses. 

After interrupting Geithner several times, telling him he wasn’t answering the question and chastising him for not providing more information on how in-depth the proposal would be, Geithner responded saying he’s “not sure it could be less detailed than the chairman’s proposal.”

In October, Camp provided a draft that would lower the corporate tax rate from 35 percent to 25 percent. The secretary did acknowledge that Camp is ahead of the administration in putting forth a proposal to lower the corporate tax rate.

Camp suggested that the administration work with the committee on the issue. 

“Going through a regular process might be a better approach,” he said. 

Lawmakers also scuffled over the health of Social Security. 

“At the risk of provoking the chairman again, we were too far apart to reach an agreement,” Geithner said. 

Republican Rep. Sam Johnson (Texas) argued that Republicans and Democrats, including Minority Whip Steny Hoyer (D-Md.), had found some “common ground” on the issue.

But Geithner countered that there is “no risk in foreseeable future for benefits for Social Security” and it is best to get any changes right to sustain the program long into the future. 

“We’re willing to discuss Social Security and fix it for good,” Johnson replied.