Treasury Secretary Timothy Geithner drew a line in the sand over taxes in defense of the Obama administration's controversial proposal to avoid the fiscal cliff.
In an interview with CNN's Candy Crowley on "State of the Union," Geithner insisted that any compromise on the plan he presented to congressional Republicans on Thursday, which includes $1.6 trillion dollars in tax revenue, cuts to Medicare, and another $50 billion in stimulus spending, must contain an expiration of the Bush tax cuts for income over $250,000.
"There's not going to be an agreement without rates going up," Geithner said in the interview, which aired Sunday. "If they are going to force higher rates on virtually all Americans because they're unwilling to let tax rates go up on 2 percent of Americans, then, I mean that's the choice they're going to have to make."
While he maintains the administration will refuse any deal without the tax hikes, Geithner was optimistic about the negotiations, showing room for compromise as well.
"It's a very good plan and we think it's a good basis for these conversations," he said. "What we did is put forward a very comprehensive, very carefully designed mix of savings and tax rates to help us put us back on a path to stabilizing our debt, fixing our debt and living within our means."
The fiscal cliff, which begins in January if Congress and the administration fail to come to an agreement over a number of spending issues, includes automatic reductions in defense and non-defense spending, the end of the payroll tax holiday, and the expiration of extended unemployment benefits. Going over the cliff has the potential to set the U.S. back into another recession.
Republican reaction after Thursday's meeting with Geithner sharply conflicted with the secretary's assessment of the negotiations and the plan itself. A frustrated House Speaker John Boehner said that "we are nowhere."
"The day after the election, I said the Republican majority would accept new revenue as part of a balanced approach that includes new spending cuts and reforms," Boehner said. "Now the White House took three weeks to respond with any kind of proposal, and much to my disappointment, it wasn't a serious one."
Increased revenues were traditionally scorned by Republicans. Boehner put them on the table by offering to close tax loopholes, reform the tax code and lower rates -- a significant move for the leader of House Republicans. He says he will not raise any tax rates and the administration proposing them brought the talks to a "stalemate."
Geithner disagreed with the speaker's assessment on the negotiations. He said the administration offered $600 billion in cuts to health care and other mandatory programs combined with the cuts still lingering from last year's debt ceiling deal (which will result in automatic spending cuts without an agreement by the end of the year) make this "a very substantial packet of reforms."
On the $50 billion in proposed stimulus that includes infrastructure spending, the secretary insisted that it is "something we can afford," calling it a "modest investment in making this country stronger."
"I think right now, the best thing to do is for them to come to us and say, look, here's what we think makes sense," Geithner said. "What we can't do is try to figure out what's going to be good for them. They have to come tell us."
"I think we're far apart still, but I think we're moving closer together," he said. "This is something we can do. And I think we're going to get there, because there's too much at stake not to get there, not just for the American economy, but for the world economy."
The secretary acknowledged the difficulty the Republican-controlled House will have passing this deal, opening the door to concessions on the administration's part.
"They're in a hard place. And they're having a tough time trying to figure out what they can do, what they can get support from their members for. That's understandable," Geithner said. "This is very difficult for them, and we might need to give them a little more time to figure out where they go next."
Reflecting on his time at the Treasury (Geithner plans on leaving the administration sometime after a deal on the fiscal cliff is made), the secretary expressed content and optimism over his four years in office.
"I think we're in a much better position than, actually, I thought was realistic, in those darkest days of this financial crisis, when there was a real risk of catastrophic collapse. And I think all Americans should be much more confident today than at any time in the last four or five, six years," he said. I'm very proud of being part of that, even with all the challenges we have ahead."